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Report of the North Carolina Utilities Commission, orders and decisions issued from ...

Report of the North Carolina Utilities Commission, orders and decisions issued from ...

NORTH
CAROLINA
UTILITIES
COMMISSION
104th
REPORT
JAN. 1, 2014
DEC. 31, 2014 ONE-HUNDRED FOURTH REPORT
OF THE
NORTH CAROLINA
UTILITIES COMMISSION
ORDERS AND DECISIONS
ISSUED FROM
JANUARY 1, 2014 THROUGH DECEMBER 31, 2014
ONE-HUNDRED FOURTH REPORT
of the
NORTH CAROLINA UTILITIES COMMISSION
ORDERS AND DECISIONS
Issued from
January 1, 2014, through December 31, 2014
Edward S. Finley, Jr., Chairman
Bryan E. Beatty, Commissioner
Susan W. Rabon, Commissioner
ToNola D. Brown-Bland, Commissioner
Don M. Bailey, Commissioner
Jerry C. Dockham, Commissioner
James G. Patterson, Commissioner
North Carolina Utilities Commission
Office of the Chief Clerk
Gail L. Mount
4325 Mail Service Center
Raleigh, North Carolina 27699-4325
The Statistical and Analytical Report of the North Carolina Utilities Commission is printed separately from the volume of Orders and Decisions and will be available from the Office of the Chief Clerk of the North Carolina Utilities Commission upon order.
LETTER OF TRANSMITTAL
December 31, 2014
The Governor of North Carolina
Raleigh, North Carolina
Sir:
Pursuant to the provisions of Section 62-17(b) of the General Statutes of North Carolina, providing for the annual publication of the final decisions of the Utilities Commission on and after January 1, 2014, we hereby present for your consideration the report of the Commission's significant decisions for the 12-month period beginning January 1, 2014, and ending December 31, 2014.
The additional report provided under G.S. 62-17(a), comprising the statistical and analytical report of the Commission, is printed separately from this volume and will be transmitted immediately upon completion of printing.
Respectfully submitted,
NORTH CAROLINA UTILITIES COMMISSION
Edward S. Finley, Jr., Chairman
Bryan E. Beatty, Commissioner
Susan W. Rabon, Commissioner
ToNola D. Brown-Bland, Commissioner
Don M. Bailey, Commissioner
Jerry C. Dockham, Commissioner
James G. Patterson, Commissioner
Gail L. Mount, Chief Clerk
TABLE OF CONTENTS
TABLE OF ORDERS AND DECISIONS PRINTED .................................................................... i
GENERAL ORDERS .................................................................................................................... 1
GENERAL ORDERS -- ELECTRIC ...................................................................................... 1
E-100, SUB 111 (09/29/2014) ............................................................................................ 1
E-100, SUB 113 (03/26/2014) ............................................................................................ 4
E-100, SUB 113 (11/13/2014) .......................................................................................... 18
E-100, SUB 134 (11/04/2014) .......................................................................................... 22
E-100, SUB 137 (06/30/2014) .......................................................................................... 55
E-100, SUB 140 (12/31/2014) .......................................................................................... 98
GENERAL ORDERS -- TELECOMMUNICATIONS ....................................................... 159
P-100, SUB 133C (01/22/2014) ...................................................................................... 159
P-100, SUB 137C (08/13/2014) ...................................................................................... 194
P-100, SUB 170 (06/11/2014) ........................................................................................ 202
GENERAL ORDERS -- TRANSPORTATION .................................................................. 203
T-100, SUB 90 (10/08/2014) .......................................................................................... 203
T-100, SUB 93 (06/05/2014) .......................................................................................... 213
GENERAL ORDERS -- WATER AND SEWER ............................................................... 218
W-100, SUB 54 (06/06/2014) ......................................................................................... 218
ELECTRIC ............................................................................................................................... 235
ELECTRIC -- FILINGS DUE PER ORDER OR RULE .................................................... 235
E-22, SUB 489 (04/10/2014) ........................................................................................ 235
E-2, SUB 238 (02/05/2014) .......................................................................................... 236
ELECTRIC -- MISCELLANEOUS ................................................................................... 238
E-22, SUB 507 (10/27/2014) ........................................................................................ 238
E-7, SUB 1052 (08/21/2014) ........................................................................................ 242
ELECTRIC -- RATE SCHEDULES/RIDERS/SERVICE RULES
& REGULATIONS ........................................................................................................... 261
E-22, SUB 514 (12/11/2014) ........................................................................................ 261
E-7, SUB 1055 (08/13/2014) ........................................................................................ 272
E-2, SUB 1030 (01/23/2014) ........................................................................................ 275
E-2, SUB 1043 (11/21/2014) ........................................................................................ 302
ELECTRIC COOPERATIVES ................................................................................................ 313
ELECTRIC COOPERATIVES-- FILINGS DUE PER ORDER OR RULE ..................... 313
EC-82, SUB 15 (01/08/2014) ....................................................................................... 313
FERRYBOATS.......................................................................................................................... 315
FERRYBOATS -- CERTIFICATE .................................................................................... 315
A-75, SUB 0 (03/31/2014) ............................................................................................. 315
NATURAL GAS ...................................................................................................................... 318
NATURAL GAS -- DECLARATORY RULING .............................................................. 318
G-63, SUB 0 (07/01/2014) ............................................................................................. 318 TABLE OF CONTENTS
NATURAL GAS -- RATE SCHEDULES/RIDERS/SERVICE RULES
& REGULATIONS ........................................................................................................... 324
G-9, SUB 649 (10/29/2014) ........................................................................................... 324
G-5, SUB 545 (09/08/2014) ........................................................................................... 350
TELECOMMUNICATIONS .................................................................................................... 368
TELECOMMUNICATIONS -- COMPLAINT .................................................................. 368
P-10, SUB 877 (07/21/2014) ......................................................................................... 368
TELECOMMUNICATIONS -- DECLARATORY RULING ........................................... 373
P-118, SUB 192; P-16, SUB 257; P-31, SUB 159; P-1394, SUB 4;
P-1136, SUB 5; P-748, SUB 7; P-738, SUB 7; P-303, SUB 8;
P-561, SUB 30; P-785, SUB 4; P-1286, SUB 2; P-1455, SUB 2;
P-1348, SUB 2; P-1341, SUB 7; P-617, SUB 6; P-520, SUB 1;
P-1570, SUB 2 (10/13/2014) ......................................................................................... 373
TRANSPORTATION ................................................................................................................ 385
TRANSPORTATION -- COMMON CARRIER CERTIFICATE ..................................... 385
T-4537, SUB 0 (11/05/2014) ........................................................................................ 385
TRANSPORTATION -- COMPLAINT ............................................................................. 393
T-4523, SUB 1 (08/14/2014) ........................................................................................ 393
TRANSPORTATION -- FILINGS DUE PER ORDER OR RULE ................................... 396
T-4353, SUB 2 (01/23/2014) ........................................................................................ 396
TRANSPORTATION -- SHOW CAUSE .......................................................................... 399
T-4552, SUB 0; T-4510, SUB 2 (12/29/2014) ............................................................. 399
WATER AND SEWER ............................................................................................................ 403
WATER AND SEWER -- COMPLAINT ........................................................................... 403
W-1160, SUB 22 (08/07/2014) ...................................................................................... 403
WATER AND SEWER -- FILINGS DUE PER ORDER OR RULE ................................ 419
W-218, SUB 363A (12/22/2014) ................................................................................... 419
W-218, SUB 363A (12/22/2014) ................................................................................... 432
WATER AND SEWER -- MISCELLANEOUS ................................................................ 436
W-408, SUB 9 (10/01/2014) .......................................................................................... 436
WATER AND SEWER -- RATE INCREASE ................................................................... 446
W-1063, SUB 3 (09/15/2014) ........................................................................................ 446
W-354, SUB 336 (03/10/2014) ...................................................................................... 454
W-354, SUB 336 (07/01/2014) ...................................................................................... 511
WATER RESELLERS ............................................................................................................. 514
WATER RESELLERS -- COMPLAINT ............................................................................ 514
WR-1163, SUB 3 (12/05/2014) ..................................................................................... 514
INDEX OF ORDERS PRINTED .............................................................................................. 521
ORDERS AND DECISIONS LISTED ..................................................................................... 525 i
2014 ANNUAL REPORT OF ORDERS AND DECISIONS
OF THE
NORTH CAROLINA UTILITIES COMMISSION
TABLE OF ORDERS AND DECISIONS PRINTED
NOTE: For Printed General Orders, see Index on Page 521
PAGE
A Magic Move
T-4552, SUB 0; T-4510, SUB 2 – Order Accepting Consent Agreement
(12/29/2014) .................................................................................................................. 399
Absolute Moving & Storage, Inc.
T-4353, SUB 2 -- Order Ruling on Compliance Filing (01/23/2014) ............................... 396
Aqua North Carolina, Inc.
W-218, SUB 363A – Order Approving Water and Sewer System Improvement
Charges on a Provisional Basis and Requiring Customer Notice (12/22/2014) .......... 419
W-218, SUB 363A – Order Approving Secondary Water Quality
Improvement Projects (12/22/2014) ............................................................................ 432
C & P Enterprises, Inc.
W-1063, SUB 3 – Recommended Order Granting Increase in Rates and
Requiring Customer Notice (09/15/2014) .................................................................... 446
Carolina Telephone and Telegraph Company
P-10, SUB 877 – Order Granting CenturyLink’s Motion to Dismiss Complaint
for Lack of Jurisdiction (07/21/2014) .......................................................................... 368
Carolina Water Service, Inc. of North Carolina
W-354, SUB 336 – Order Granting Partial Rate Increase, Approving Rate
Adjustment Mechanism, and Requiring Customer Notice (03/10/2014) .................... 454
W-354, SUB 336 – Order Amending Prior Order to Correct Errors, Modifying
Sewer Rate Design, Implementing GRT Rate Changes, and Requiring
Refund Plan (07/01/2014) ............................................................................................. 511
Cross-State Development Corporation
W-408, SUB 9 – Order Appointing Emergency Operator and Approving
Increased Rates (10/01/2014) ....................................................................................... 436
ii
Dominion North Carolina Power; Virginia Electric & Power Co., d/b/a
E-22, SUB 489 – Order Accepting Registration of New Renewable Energy
Facility (04/10/2014) .................................................................................................... 235
E-22, SUB 507 – Order Approving Program (10/27/2014) ................................................ 238
E-22, SUB 514 – Order Approving REPS and REPS EMF Riders and
2013 REPS Compliance (12/11/2014) .......................................................................... 261
Duke Energy Carolinas, LLC
E-7, SUB 1052 – Order Approving REPS and REPS EMF Riders and
2013 REPS Compliance (08/21/2014) .......................................................................... 242
E-7, SUB 1055 – Order Approving Program (08/13/2014) ............................................... 272
Duke Energy Progress, Inc.
E-2, SUB 238 – Order Approving Modification of Sample Test Plan (02/05/2014) ........ 236
E-2, SUB 1030 – Final Order Approving DSM/EE Rider (01/23/2014) ........................... 275
E-2, SUB 1043 – Order Approving REPS and REPS EMF Riders and
2013 REPS Compliance (11/21/2014) ......................................................................... 302
EnergyUnited Electric Membership Cooperative
EC-82, SUB 15 – Order Approving Program Revisions (01/08/2014) ............................. 313
Island Express Ferry Service, LLC
A-75, SUB 0 – Order Granting Common Carrier Authority (03/31/2014) ....................... 315
KDHWWTP, L.L.C.
W-1160, SUB 22 – Order Ruling on Complaint (08/07/2014) ......................................... 403
Petroleum Fuel & Terminal Company
G-63, SUB 0 -- Order Finding Pipeline Safety Laws Applicable and Granting
a Special Permit on Conditions (07/01/2014) .............................................................. 318
Pick Up & Go Moving International
T-4523, SUB 1 – Order Scheduling Hearing, Clarifying Issues for
Hearing, and Dismissing Claim, in Part (08/14/2014) ................................................. 393
Piedmont Natural Gas Company, Inc.
G-9, SUB 649 – Order on Petition for Limited Waiver of Rate Schedule 106
Billing Procedures (10/29/2014) .................................................................................. 324
Public Service Company of North Carolina, Inc.
G-5, SUB 545 -- Order on Petition for Limited Modification of Rider A
and Request for Expedited Decision (09/08/2014) ..................................................... 350
iii
Sumare, LP
WR-1163, SUB 3 – Recommended Order Affirming Complaint in Part, Dismissing
In Part, Recalculating Ratepayer Bills, and Requiring Compliance with
Commission Rules (12/05/2014) ................................................................................. 514
White Glove Movers, LLC
T-4537, SUB 0 -- Order Ruling on Fitness and Show Cause Proceeding
(11/05/2014) ................................................................................................................ 385
Windstream North Carolina, LLC
P-118, SUB 192; P-16, SUB 257; P-31, SUB 159; P-1394, SUB 4; P-1136, SUB 5;
P-748, SUB 7; P-738, SUB 7; P-303, SUB 8; P-561, SUB 30; P-785, SUB 4;
P-1286, SUB 2; P-1455, SUB 2; P-1348, SUB 2; P-1341, SUB 7;
P-617, SUB 6; P-520, SUB 1; P-1570, SUB 2 – Declaratory Ruling
(10/13/2014) ................................................................................................................. 373
GENERAL ORDERS – ELECTRIC
1
DOCKET NO. E-100, SUB 111
BEFORE THE NORTH CAROLINA UTILITIES COMMISSION
In the Matter of
Rulemaking Proceeding to Consider Revisions to Commission Rule R8-60
on Integrated Resource Planning
)
)
)
ORDER REQUESTING
COMMENTS REGARDING
RULE R8-60 AMENDMENTS
BY THE COMMISSION: General Statute 62-110.1(c) and G.S. 62-2(a)(3a) set forth certain policies and requirements for integrated resource planning (IRP) in North Carolina. The Commission implements G.S. 62-110.1(c) and G.S. 62-2(a)(3a) through the provisions of Commission Rule R8-60. By order issued on October 19, 2006, in Docket No. E-100, Subs 103, 110, and 111, the Commission opened a rulemaking proceeding “to consider revisions in the IRP process provided in Commission Rule R8-60.”1 On November 27, 2006, the Commission issued an order requesting comments and reply comments on proposed revisions to the Rule. Based upon the consensus reached among the parties and the reasonableness of the parties' proposed revisions, on July 11, 2007, the Commission issued its Order Revising Integrated Resource Planning Rules that adopted the current Rule R8-60 covering the reporting requirements for both the biennial IRP reports and the annual update reports. In summary, the revised rule establishes different IRP reporting requirements for even-numbered years and odd-numbered years. Beginning in 2008, and every two years thereafter, the electric utilities are required to file a biennial report that includes comprehensive IRP information. Beginning in 2009, and every two years thereafter, the electric utilities are required to file an annual report that updates the information contained in their last biennial reports. Pursuant to Rule R8-60(j), the procedure for intervention, comments, reply comments and hearing requests is the same for biennial and annual reports, except that initial comments are due within 150 days after the filing of biennial reports, but only 60 days after the filing of annual reports. Subsection (j) further requires that one or more public witness hearings shall be scheduled by the Commission.
In the Commission's 2013 IRP proceeding, in Docket No. E-100, Sub 137, several parties filed comments regarding the annual IRP reports and procedures.
In its April 11, 2014 comments, the Public Staff noted that despite the Commission’s efforts to keep the IRP process within the established schedules, the annual IRP process has typically taken more than a year to complete. In addition, the Public Staff stated that the utilities have indicated that in order for Commission directives to be fully considered in their next IRPs they need to receive the inputs from the Commission in late spring or early summer prior to the next IRP filing deadline. Further, the Public Staff opined that the complexity of issues and sheer volume of information to be considered have resulted in a process that is sometimes disjointed and reactive, rather than constructive and deliberate. Therefore, the Public Staff believes that it may be appropriate to consider some changes to the IRP process to make it more robust and meaningful. Included among the changes considered by the Public Staff is a biennial process with less extensive
1 The October 19, 2006 order was prompted by recommendations made by a workgroup that was created by the Commission in connection with the 2005 IRP proceedings in Docket No. E-100, Sub 103. GENERAL ORDERS – ELECTRIC
2
information required, but with more stakeholder involvement in the development of the inputs and scenarios to be used. For example, the Commission could require the utilities to include certain common scenarios and sensitivities that will be of interest to all participants and allow for better comparison of alternatives. In order to do so, the Commission may wish to consider issuing expedited rulings on key inputs and assumptions in order to ensure that these items are received in time to be fully incorporated by the utilities in their modeling processes. In addition, comments and public hearings on the annual update reports could be required only at the discretion of the Commission.
The Public Staff recommended that the Commission request comments from the electric utilities and other parties on potential changes to the IRP process that may assist in making the process more robust and effective for all of the parties involved.
According to Duke Energy Carolinas, LLC, and Duke Energy Progress, Inc. (collectively, Duke) in their joint reply comments on May 23, 2014, the IRP process has expanded in scope over time through incremental annual IRP rulings, along with a growing number of special interest group intervenors participating in the IRP process. However, most of these intervenors focus only on issues of importance to their members or stakeholders. Further, they lack the obligation to provide reliable power delivery and the obligation for least cost planning on behalf of all Duke customers that the IRP planning process requires. In addition, Duke maintains that many of the individual issues now being raised by intervenors in the IRP dockets have their own focused regulatory proceedings. For example, the IRP clearly has overlap with EE, REPS, fuel, CPCN, avoided cost and rate case proceedings. However, the IRP was never intended to supplant or supersede these more focused proceedings. Duke further contends that several of the recommendations expressed by intervenors in their IRP comments are the same recommendations made within the context of the more focused proceedings. Thus, this moves the IRP process away from its main focus of long term planning toward more of a shorter term operational focus. Duke concludes by stating that it would be supportive of working toward productive revisions to the annual update process.
Dominion North Carolina Power (DNCP), in its May 23, 2014 reply comments, stated that it would welcome the opportunity to comment on the IRP process with an eye towards streamlining the annual updates to make them less burdensome. DNCP noted that its IRP process is ongoing and is designed to meet its biennial resource planning responsibilities in both Virginia and North Carolina. DNCP states that its IRP filing in Virginia is due on September 1 of each odd-numbered year. Thus, a streamlined update proceeding in North Carolina while DNCP is engaged in a full proceeding in Virginia would help DNCP maximize and conserve its planning resources.
Regarding stakeholder participation in the development of the utilities' IRPs, DNCP states that it does not believe a "North Carolina-wide" stakeholder process is necessary or would benefit each of the utilities in developing their IRPs. In addition, DNCP notes that its development of an IRP is a distinct process from Duke's planning process. However, DNCP does not oppose allowing up front input into its IRP process and has had a stakeholder review process in place in Virginia for several years. DNCP states that the Public Staff, Southern Environmental Law Center, Sierra Club and others routinely participate in its Virginia stakeholder review process and that this forum could be opened to other interested parties from North Carolina as well. GENERAL ORDERS – ELECTRIC
3
In its June 30, 2014 Order Approving Integrated Resource Plan Annual Update Reports and REPS Compliance Plans, the Commission noted these issues and included the following conclusion in its Order:
The Commission understands the time and complexity concerns that the parties have with the current IRP planning process. Between the time extension requests and the increasing complexity of the issues raised during the proceedings, it makes for drawn out IRP timelines. The Commission agrees that some modifications might be warranted, especially to these odd-year annual update proceedings. For this reason, the Commission intends to open a future docket which will request comments and reply comments on the specific issues of what might be done to streamline the annual update reporting process so that it does not simply become another biennial proceeding with a different name.
Based on the foregoing and the record, the Commission is of the opinion that there is good cause to request comments from the Public Staff and all interested parties regarding possible revisions to the procedures that the Commission will employ in its review of the IRP annual reports filed in odd-numbered years. Further, the Commission finds good cause to specify that the Public Staff and other parties should address the following issues, in addition to any other points that they desire to comment upon.
(1) Whether the Public Staff should be the only party expressly allowed to file comments and recommendations about the annual reports?
(2) Whether the Commission should be required to make a finding of necessity before a public witness and/or evidentiary hearing is scheduled?
(3) Whether there are categories of information or particular subjects that are not necessary for inclusion in the annual reports?
(4) Whether there are procedures or methods that should be adopted to achieve more stakeholder involvement in the annual reports prior to the reports being filed with the Commission?
IT IS, THEREFORE, ORDERED as follows:
1. That this docket is hereby reopened. All filings related to this review of Commission Rule R8-60 shall be filed in this docket.
2. That all persons that previously intervened in this docket shall be entitled to participate in this docket without the necessity of filing a petition to intervene.
3. That on or before November 7, 2014, persons having an interest in this matter may file petitions to intervene.
4. That the Chief Clerk shall serve this Order Requesting Comments on all persons that previously intervened in this docket.
5. That on or before November 7, 2014, all parties may file initial comments. GENERAL ORDERS – ELECTRIC
4
6. That on or before December 5, 2014, all parties may file reply comments.
ISSUED BY ORDER OF THE COMMISSION.
This the 29th day of September, 2014.
NORTH CAROLINA UTILITIES COMMISSION
Gail L. Mount, Chief Clerk
Commissioner James G. Patterson did not participate in this decision.
DOCKET NO. E-100, SUB 113
BEFORE THE NORTH CAROLINA UTILITIES COMMISSION
In the Matter of
Rulemaking Proceeding to Implement Session Law 2007-397
)
)
)
)
FINAL ORDER MODIFYING THE POULTRY AND SWINE WASTE SET-ASIDE REQUIREMENTS AND PROVIDING OTHER RELIEF
HEARD: Tuesday, November 5, 2013, Commission Hearing Room 2115, Dobbs Building, 430 North Salisbury Street, Raleigh, North Carolina
BEFORE: Chairman Edward S. Finley, Jr., Presiding, and Commissioners Bryan E. Beatty, Susan W. Rabon, ToNola D. Brown-Bland, Jerry C. Dockham, and James G. Patterson
APPEARANCES:
For Duke Energy Carolinas, LLC, and Duke Energy Progress, Inc.:
Lawrence B. Somers, Deputy General Counsel, Duke Energy Corporation, P.O. Box 1551, NCRH 20, Raleigh, North Carolina 27602
For Dominion North Carolina Power, Inc.:
E. Brett Breitschwerdt and Mary Lynne Grigg, McGuireWoods LLP, 434 Fayetteville Street, Suite 2600, Raleigh, North Carolina 27601
For GreenCo Solutions, Inc.:
Richard M. Feathers, GreenCo Solutions, Inc., 3400 Sumner Boulevard, P.O. Box 27306, Raleigh, North Carolina 27611-7306
For North Carolina Eastern Municipal Power Agency and North Carolina Municipal Power Agency No. 1: GENERAL ORDERS – ELECTRIC
5
Daniel C. Higgins, Burns, Day & Presnell, P.A., P.O. Box 10867, Raleigh, North Carolina 27605
For EnergyUnited Electric Membership Corporation:
Phillip Harris, Nelson Mullins Riley & Scarborough LLP, GlenLake One, Suite 200, 4140 Parklake Avenue, Raleigh, North Carolina 27612
For the Public Works Commission of the City of Fayetteville:
James P. West, West Law Offices, P.C., 434 Fayetteville Street, Suite 2325, Raleigh, North Carolina 27601
For the Tennessee Valley Authority:
Mark S. Calvert, Senior Attorney, Tennessee Valley Authority, 400 W. Summit Hill Drive, WT 6A, Knoxville, Tennessee 37902
For the North Carolina Sustainable Energy Association:
Michael D. Youth, North Carolina Sustainable Energy Association, 1111 Haynes St, Raleigh, North Carolina 27604
For Green Energy Solutions NV, Inc.:
R. Sarah Compton, PO Box 12728, Raleigh, North Carolina 27605
For the North Carolina Pork Council:
Kurt J. Olson, Law Office of Kurt J. Olson, 3737 Glenwood Avenue, Suite 100, Raleigh, North Carolina 27612
For North Carolina Poultry Federation, Inc:
Henry W. Jones, Jr., Jordan Price Wall Gray Jones & Carlton, 1951 Clark Avenue, Raleigh, North Carolina 27605
For the Using and Consuming Public:
Robert S. Gillam and Tim R. Dodge, Staff Attorneys, North Carolina Utilities Commission – Public Staff, 4326 Mail Service Center, Raleigh, North Carolina 27699-4326
BY THE COMMISSION: On November 29, 2012, in the above-captioned proceeding, the Commission issued an Order (2012 Delay Order) modifying the 2012 poultry and swine waste set-aside requirements under the State’s Renewable Energy and Energy Efficiency Portfolio Standard (REPS) established in G.S. 62-133.8. These requirements are set forth in subsections (e) and (f) of G.S. 62-133.8, establishing set-asides within the electric power suppliers’ overall renewable GENERAL ORDERS – ELECTRIC
6
energy requirement. Pursuant to the 2012 Delay Order, the Commission eliminated the 2012 swine waste set-aside requirement for all electric power suppliers and delayed by one year the poultry waste set-aside requirement for all electric power suppliers. Consistent with that Order, the electric power suppliers, in the aggregate, were required to comply with the requirements of G.S. 62-133.8(e) according to the following schedule:
Calendar Year Requirement for Swine Waste Resources
2013-2014 0.07%
2015-2017 0.14%
2018 and thereafter 0.20%
Further, the electric power suppliers, in the aggregate, were required to comply with the requirements of G.S. 62-133.8(f) according to the following schedule:
Calendar Year Requirement for Poultry Waste Resources
2013 170,000 megawatt hours
2014 700,000 megawatt hours
2015 and thereafter 900,000 megawatt hours
On September 16, 2013, Duke Energy Carolinas, LLC (DEC);1 Duke Energy Progress, Inc. (DEP);2 Virginia Electric and Power Company, d/b/a Dominion North Carolina Power (DNCP);3 GreenCo Solutions, Inc. (GreenCo);4 the Public Works Commission of the City of Fayetteville (Fayetteville); EnergyUnited Electric Membership Corporation (EnergyUnited); Halifax Electric Membership Corporation (Halifax); and the Tennessee Valley Authority (TVA)5 (collectively, the Joint Movants) filed a Joint Motion to Modify and Delay the 2013 Requirements of N.C.G.S. 62-133.8(e) and (f) Due to Lack of Sufficient Swine and Poultry Waste (Joint Motion).
1 DEC asserted that it is also acting in its capacity as REPS compliance aggregator for Blue Ridge Electric Membership Corporation (EMC), Rutherford EMC, the City of Dallas, Forest City, the City of Concord, the Town of Highlands and the City of Kings Mountain.
2 DEP asserted that it is also acting in its capacity as REPS compliance aggregator for the towns of Sharpsburg, Lucama, Black Creek, and Stantonsburg, and the City of Waynesville.
3 Dominion asserted that it is also acting in its capacity as REPS compliance aggregator for the Town of Windsor.
4 In its September 3, 2013 REPS compliance plan in Docket No. E-100, Sub 113, GreenCo stated that its members are Albemarle EMC, Brunswick EMC, Cape Hatteras EMC, Carteret-Craven EMC, Central EMC, Edgecombe-Martin County EMC, Four County EMC, French Broad EMC, Haywood EMC, Jones-Onslow EMC, Lumbee River EMC, Pee Dee EMC, Piedmont EMC, Pitt & Greene EMC, Randolph EMC, Roanoke EMC, South River EMC, Surry-Yadkin EMC, Tideland EMC, Tri-County EMC, Union EMC and Wake EMC. GreenCo has stated that it also provides REPS compliance services for Broad River Electric Cooperative and Mecklenburg Electric Cooperative, and that the REPS requirements for the Town of Oak City are included in the requirements for Edgecombe-Martin County EMC.
5 TVA asserted that it is acting in its capacity as REPS compliance aggregator for Blue Ridge Mountain EMC, Mountain Electric Cooperative, Tri-State EMC and Murphy Electric Power Board. GENERAL ORDERS – ELECTRIC
7
On September 20, 2013, the North Carolina Eastern Municipal Power Agency (NCEMPA)1 and North Carolina Municipal Power Agency Number 1 (NCMPA1)2 (collectively, the Power Agencies) filed a similar joint motion requesting that the Commission delay the 2013 poultry and swine waste set-aside requirements for one year (Power Agency Motion).
Both the Joint Movants and the Power Agencies requested that the Commission, pursuant to G.S. 62-133.8(i)(2), often referred to as the “off-ramp” provision of the REPS statute, grant relief from compliance with the 2013 poultry and swine waste set-aside requirements by ordering a one-year delay of both set-aside requirements. G.S. 62-133.8(i)(2) states that the Commission may modify or delay the provisions of subsections (b), (c), (d), (e), and (f) of G.S. 62-133.8 in whole, or in part, if the Commission determines that it is in the public interest to do so. General Statute 62-133.8(i)(2) requires that each electric power supplier requesting relief demonstrate that it made a reasonable effort to meet the requirements set out in the REPS statute.
On September 23, 2013, the Commission issued an Order Scheduling Hearing and Requiring Testimony setting the matter for hearing, establishing deadlines for filing testimony, and requiring the Joint Movants and Power Agencies to respond to questions posed by the Commission. The Order directed each electric power supplier, or its REPS compliance aggregator, to address: (1) the actions it has taken to meet the swine waste and poultry waste requirements; (2) the number of poultry and swine waste renewable energy certificates (RECs) it is currently required to retire for 2013 compliance; and (3) the number of poultry and swine waste RECs it anticipates that it will own by the end of 2013.
On October 11, 2013, DEC and DEP filed the direct testimony of Jonathan L. Byrd, Manager of Renewable Strategy and Compliance; DNCP filed the direct testimony of Chiman H. Muchhala, Manager of Market Operations; Halifax filed the direct testimony of Charles H. Guerry, Executive Vice President; EnergyUnited filed the direct testimony of Alec Natt, Chief Financial Officer; Fayetteville filed the direct testimony of Keith Lynch, Power Contracts and Regulatory Manager; NCEMPA and NCMPA1 filed the direct testimony of Andrew M. Fusco, Vice President of Member Planning and Corporate Services, ElectriCities of North Carolina, Inc.; GreenCo filed the direct testimony of Jason B. Nemeth, Director, Business Operations; and TVA filed the direct testimony of David B. DeHart, Program Manager, Renewable Energy.
On October 21, 2013, the Commission issued an Order Rescheduling Hearing, rescheduling the evidentiary hearing from November 6, 2013, to November 5, 2013.
1 According to its August 26, 2013 filing in Docket No. E-100, Sub 139, NCEMPA provides REPS compliance services for the following municipalities, which are also members of NCEMPA: Apex, Ayden, Belhaven, Benson, Clayton, Edenton, Elizabeth City, Farmville, Fremont, Greenville, Hamilton, Hertford, Hobgood, Hookerton, Kinston, LaGrange, Laurinburg, Louisburg, Lumberton, New Bern, Pikeville, Red Springs, Robersonville, Rocky Mount, Scotland Neck, Selma, Smithfield, Southport, Tarboro, Wake Forest, Washington, and Wilson. (The City of Wilson meets the REPS compliance requirements of the towns of Pinetops, Macclesfield, and Walstonburg.)
2 According to its August 26, 2013 filing in Docket No. E-100, Sub 139, NCMPA1 provides REPS compliance services for the following municipalities, which are also members of NCMPA1: Albemarle, Bostic, Cherryville, Cornelius, Drexel, Gastonia, Granite Falls, High Point, Huntersville, Landis, Lexington, Lincolnton, Maiden, Monroe, Morganton, Newton, Pineville, Shelby, and Statesville. GENERAL ORDERS – ELECTRIC
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On October 25, 2013, the Public Staff filed the testimony of Jay B. Lucas, Electric Engineer; the North Carolina Pork Council (Pork Council) filed the testimony of Angela W. Maier, Director of Policy Development and Communications; and the North Carolina Poultry Federation, Inc. (NCPF), filed the testimony of Summer Lanier, Public Relations Director, Prestage Farms, Inc.
On October 28, 2013, Green Energy Solutions NV, Inc., filed a written statement of position, but did not file testimony.
On November 1, 2013, the Power Agencies filed the rebuttal testimony of witness Fusco, and Fayetteville filed the rebuttal testimony of witness Lynch. Also on that date, Dominion filed a letter stating that it accepted Public Staff witness Lucas’ recommendations to approve the relief requested in the Joint Motion subject to the conditions outlined in witness Lucas’ testimony.
On November 5, 2013, the Commission issued an Order stipulating the testimony of Halifax witness Guerry and EnergyUnited witness Natt into evidence and excusing these witnesses from attending the hearing.
On November 5, 2013, the matter came on for hearing as scheduled. DEC and DEP presented the direct testimony of witness Byrd; TVA presented the direct testimony of witness DeHart; the Power Agencies presented the direct and rebuttal testimony of witness Fusco; Fayetteville presented the direct and rebuttal testimony of witness Lynch; the Pork Council presented the testimony of witness Maier; and the Public Staff presented the testimony of witness Lucas. The testimonies of GreenCo witness Nemeth, DNCP witness Muchhala, and NCPF witness Lanier were also stipulated into evidence and entered into the record at the opening of the hearing.
On November 12, 2013, DEC and DEP submitted a late-filed exhibit requested by Chairman Finley during the hearing.
On November 14, 2013, the Public Staff and NCMPA1 jointly submitted a late-filed exhibit requested by Chairman Finley during the hearing.
On November 26, 2013, NCPF and TVA each filed briefs. On November 27, 2013, the Power Agencies, the Public Staff, and the Joint Movants (excluding TVA) each filed proposed orders, the Pork Council filed a brief, and the North Carolina Sustainable Energy Association filed a letter supporting NCPF. Also on November 27, 2013, North Carolina Electric Membership Corporation filed a letter responding to the November 12, 2013 DEC/DEP late-filed exhibit.
On December 20, 2013, the Commission issued a Notice of Decision and Order stating that, due to the timing of the motions by the Joint Movants and the Power Agencies, it was not possible for the Commission to develop its complete order before the end of 2013, but that the Commission had made its decision in this docket. The Notice of Decision provided notice that the Commission would issue an order (1) delaying the 2013 requirements of G.S. 62-133.8(e) and (f), as established in the 2012 Delay Order, for one year; (2) requesting that the Public Staff arrange and facilitate two stakeholder meetings a year during 2014 and 2015; and (3) applying the triannual filing requirement first required by the 2012 Delay Order to DNCP, GreenCo, Fayetteville, EnergyUnited, Halifax, NCEMPA and NCMPA1. GENERAL ORDERS – ELECTRIC
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The Notice of Decision and Order stated that a final Order, including findings of fact and conclusions, would be issued at a later date. The instant Order is that final Order, and the time for filing an appeal from the decision of the Commission shall begin to run on the date of issuance of this Order.
FINDINGS OF FACT
1. The State’s electric power suppliers have made a reasonable effort to comply with the 2013 statewide swine and poultry waste set-aside requirements established by G.S. 62-133.8(e) and G.S. 62-133.8(f), but will not be able to comply.
2. Compliance with the set-aside requirements has been hindered by the fact that the technology of power production from poultry and swine waste continues to be in its early stages of development.
3. Compliance with the set-aside requirements has been hindered in some respects, and promoted in other respects, by the General Assembly, which has modified the REPS on several occasions and considered other proposals for additional modifications. Legislative and regulatory developments have made new options for compliance available to electric power suppliers; on the other hand, because of periodic proposals for change, many lenders and investors perceive the future of the REPS as uncertain.
4. Electric power suppliers and renewable power developers have worked in good faith to resolve issues previously determined to have hindered compliance, such as negotiation of power purchase agreement terms and conditions and the cost and time required to properly interconnect poultry and swine waste generation facilities with the electric grid. Despite these efforts, and a decrease in problems regarding interconnection and contractual language, developers of waste-to-energy facilities and their lenders and investors remain cautious and slow to act.
5. No party presented evidence that the aggregate 2013 poultry and swine waste set-aside requirements could be met; nor did any party oppose Joint Movants’ and Power Agencies’ motions for relief from the 2013 poultry and swine waste set-aside requirements.
6. It is in the public interest to delay required compliance by the State’s electric power suppliers with the requirements of G.S. 62-133.8(e) and (f) for one year.
7. Although a few electric power suppliers indicated their ability to meet a pro-rata allocation of the statutory requirement, it is appropriate to delay the statutory deadlines of the poultry and swine waste set-aside requirements, not only for those electric power suppliers that have been unable to comply, but for all electric power suppliers.
8. Electric power suppliers that have acquired poultry and swine waste RECs for 2013 REPS compliance should be allowed to bank such RECs for poultry and swine waste set-aside requirement compliance in future years.
9. Electric power suppliers should continue to make efforts to purchase any reasonably-priced poultry and swine waste RECs available in order to support the construction and GENERAL ORDERS – ELECTRIC
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operation of poultry and swine waste generation facilities and to fulfill requirements pursuant to this Order.
10. DEC and DEP should continue to file the verified triannual progress reports required by Ordering Paragraph No.4 of the 2012 Delay Order, and DNCP, GreenCo, Fayetteville, EnergyUnited, Halifax and the Power Agencies should also file these reports. The Power Agencies should be permitted to file their reports jointly if they so desire. The filing of these progress reports should continue until the Commission orders that they be discontinued.
11. It is appropriate for the Public Staff to arrange and facilitate two stakeholder meetings a year during 2014 and 2015.
EVIDENCE AND CONCLUSIONS FOR FINDINGS OF FACT 1-6
The evidence supporting these findings of fact appears in the testimony of DEC/DEP witness Byrd, DNCP witness Muchhala, TVA witness DeHart, Fayetteville witness Lynch, Power Agencies witness Fusco, EnergyUnited witness Natt, Halifax witness Guerry, GreenCo witness Nemeth, NCPF witness Lanier, Pork Council witness Maier, and Public Staff witness Lucas.
DEC/DEP witness Byrd testified that DEC and DEP worked diligently to comply with the 2013 poultry and swine waste set-aside requirements. Witness Byrd stated that DEP had acquired enough poultry RECs to meet its 2013 poultry waste set-aside requirement. Witness Byrd further testified, however, that DEC could not comply with its 2013 poultry waste set-aside requirement and that neither company was able to meet the 2013 swine waste set-aside requirement. Witness Byrd stated that DEC and DEP remain in active ongoing negotiations for the purchase of in-state poultry and swine RECs; they continue to explore opportunities to secure out-of-state RECs; they maintain open solicitations for additional poultry and swine resources; and they are making good-faith efforts to assist developers with difficulties in interconnecting facilities to the grid. In addition, witness Byrd stated that DEC is continuing to engage in swine waste research through its support of the Loyd Ray Farms project.
Witness Byrd stated that DEC and DEP have found that the production of electricity from poultry and swine waste is technologically challenging; it is more expensive than other more common forms of renewable energy; and that swine farms are typically located in very remote and rural areas, making interconnection costly and difficult. Further, witness Byrd stated that poultry and swine waste developers have encountered difficulties in financing their projects, in obtaining long-term supplies of animal waste fuel, and in other areas. As a result, developers have frequently delayed their commercial operation dates or abandoned their contracts with DEC and DEP. Witness Byrd stated that Commission decisions interpreting the poultry waste set-aside requirement, and the General Assembly's enactment of legislation affecting the requirement, caused DEC and DEP to frequently pause and reconsider their poultry waste compliance strategy, resulting in the loss of time. Witness Byrd testified that, in spite of all these difficulties, many of the poultry and swine waste developers who are working with DEC and DEP have made great strides. The developers have been confronted with a host of practical problems, and, as they have learned how to deal with these problems, they have brought their projects closer to commercial operation. GENERAL ORDERS – ELECTRIC
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DNCP witness Muchhala testified that DNCP has participated in the Swine Waste REC Buyers Group organized by the electric power suppliers in North Carolina, has solicited numerous REC marketers and brokers, and has conducted its own search to locate operational swine waste digesters anywhere in the United States. According to witness Muchhala, all these efforts have failed and DNCP has not been able to acquire any swine waste RECs. Witness Muchhala testified that, because DNCP is permitted by statute to rely entirely on out-of-state sources, DNCP has been able to purchase sufficient out-of-state poultry RECs to meet the requirements of the poultry waste set-aside. However, DNCP has contracted to provide REPS compliance services for the Town of Windsor, which is required to provide 75 percent of its RECs from in-state sources, and it has not found any in-state swine or poultry waste RECs; consequently, DNCP is unable to comply with either of the 2013 poultry and swine waste set-aside requirements on Windsor's behalf.
TVA witness DeHart testified that TVA made reasonable efforts to comply with the 2013 poultry and swine waste set-aside requirements. Witness DeHart stated that TVA met with other North Carolina electric power suppliers to discuss joint efforts to purchase poultry and swine waste RECs, and, TVA has solicited offers from waste-to-energy developers for RECs or generation to meet the poultry and swine waste set-aside requirements. Witness DeHart testified that, despite these efforts, TVA is unable to comply with the 2013 poultry and swine waste set-aside requirements.
Fayetteville witness Lynch testified that Fayetteville is participating in the electric power suppliers' joint request for proposals (RFP) seeking poultry waste REC sales contracts; it has issued a separate RFP for swine waste RECs, to which no responses were received; and it has diligently assessed the market for opportunities to acquire poultry and swine waste RECs, but no such opportunities have been available. Witness Lynch's testimony as to whether Fayetteville will be able to meet the 2013 poultry and swine waste set-aside requirements was confidential.
Power Agencies witness Fusco testified that there is no reason to believe the State's electric power suppliers will be able to comply with the 2013 poultry and swine waste set-aside requirements. Witness Fusco stated that the Power Agencies, along with other electric power suppliers, entered into long­term swine REC purchase agreements with four counterparties; however, three of the counterparties repeatedly failed to meet the requirements of the agreements and the agreements were subsequently terminated. The contracts with the remaining counterparty are still in effect, but the project’s commercial operation date has been significantly delayed and the projected output has been reduced. Witness Fusco further stated that the Power Agencies have continued to look, with limited success, for other suppliers that could provide swine waste RECs. They were able to purchase swine waste RECs from an out-of-state supplier; however, this supplier's registration as a renewable energy facility was subsequently revoked by the Commission and the RECs were invalidated. With respect to poultry waste, witness Fusco stated that the Power Agencies have contracted to purchase RECs from various counterparties. However, according to witness Fusco, some of these counterparties' projects have failed and the others have been delayed.
Witness Fusco testified that in his view the reasons for the Power Agencies' difficulties in obtaining poultry and swine waste RECs include: (1) the small number of participants in the market for swine waste RECs; (2) the fact that most of the swine waste market participants lack actual experience with biomass technologies; (3) the lack of a website where animal waste generation GENERAL ORDERS – ELECTRIC
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projects can easily be identified and contacted; (4) the financing difficulties encountered by developers of poultry waste generation; (5) uncertainties arising from environmental regulatory permitting issues relating to poultry waste; and (6) the continuing legislative and regulatory developments directly affecting the poultry waste set-aside. Witness Fusco noted that, although these legislative and regulatory developments have created uncertainty, they have also expanded the universe of compliance options, and the Power Agencies are seeking to make use of these options. On cross­examination, witness Fusco testified that the Power Agencies have contracted with developers managing the proposed ReVenture project, which was expected to come on line by the end of 2013. According to witness Fusco, if the Reventure project remains on schedule and is on line in 2014, the Power Agencies will be able to meet the requested modified requirements of the poultry waste set-aside for 2014.
EnergyUnited witness Natt stated that EnergyUnited has purchased out-of-state poultry and swine waste RECs, and, that it has engaged in collaborative efforts with other North Carolina electric power suppliers to obtain in-state RECs. His testimony on whether EnergyUnited will be able to comply with the 2013 poultry and swine waste set-aside requirements was confidential.
Halifax witness Guerry did not appear at the hearing. Witness Guerry’s testimony was admitted into the record pursuant to the Commission's November 5, 2013 Order. He testified that Halifax participated in the collaborative efforts of the State's electric power suppliers to obtain poultry and swine waste RECs, but, to date those efforts have been unsuccessful. Witness Guerry stated that Halifax entered into an individual agreement to purchase RECs from a swine waste-to-energy developer, however, this developer has not yet registered with the Commission as a renewable energy facility. Consequently, according to witness Guerry, Halifax is unable to meet the 2013 poultry and swine waste set-aside requirements.
GreenCo witness Nemeth testified that GreenCo has participated in the collaborative efforts of the State's electric power suppliers to obtain poultry and swine waste RECs, and in addition, GreenCo has had discussions with numerous developers seeking to produce power from animal waste. As a result of these discussions, GreenCo has purchased some swine waste RECs both in-state and out-of-state, and some out-of-state poultry waste RECs. However, according to witness Nemeth, GreenCo has not acquired enough RECs to meet the 2013 poultry and swine waste set-aside requirements.
NCPF witness Lanier testified that NCPF does not oppose the request for a delay of one year to the poultry waste set-aside requirements. Witness Lanier stated that her employer, Prestage Farms, Inc., is in the process of developing a poultry litter gasification facility in Bladen County. Witness Lanier listed the benefits of generating power from poultry litter, emphasizing that power generation will provide a beneficial use for poultry waste in the event that the current practice of land application is prohibited.
Pork Council witness Maier testified that, although the development of electric generation from swine waste has taken time, significant gains are being made. Witness Maier stated that there are six permitted projects in North Carolina, including a 1.3-MW facility being developed by Revolution Energy in the town of Magnolia, which is expected to be fully operational in November 2013. She noted that the use of swine waste for power generation provides an GENERAL ORDERS – ELECTRIC
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alternative to the disposition of waste in lagoons, which has disadvantages and resulted in a moratorium on the expansion of the hog industry in the State. Witness Maier stated that with the enactment of the swine waste set-aside requirement, the State's electric power suppliers were given the responsibility to actively support and assist in the development of energy production from swine waste. In witness Maier’s opinion, this responsibility has not been fully embraced by all electric suppliers. She asserted that the electric suppliers should make greater efforts to ensure that the language of their REC purchase contracts does not place unreasonable burdens on developers. Finally, witness Maier recommended that the provision contained in the 2012 Delay Order, requiring DEC and DEP to file triannual progress reports, be made applicable to all of the State's electric power suppliers.
Public Staff witness Lucas testified that the Joint Movants’ and the Power Agencies’ motions should be granted because the electric power suppliers are unable to comply with the 2013 poultry and swine waste set-aside requirements. Witness Lucas stated that, even though DEC and DEP have not acquired enough poultry and swine waste RECs to meet the requirements, it is clear that they have made good-faith efforts to do so. Witness Lucas further stated his belief that the other electric power suppliers have made good-faith efforts to comply, but that he cannot say so with the same degree of certainty because the other suppliers have not been required to meet the same level of transparency and additional reporting requirements that DEC and DEP were required to adhere to pursuant to the 2012 Delay Order.
Witness Lucas further testified that at the hearing prior to the 2012 Delay Order, he identified several factors that made compliance with the set­asides difficult, including: (1) uncertainty as to the environmental requirements applicable to waste-to-energy facilities; (2) uncertainty arising from the numerous statutory amendments affecting the poultry waste set-aside; (3) disagreements between electric power suppliers and developers on contract terms, particularly those relating to change of law provisions; and (4) difficulties in reaching satisfactory interconnection agreements. Witness Lucas stated that uncertainty surrounding potential changes to the REPS statute continues to exist, while the uncertainty about environmental requirements has diminished to some degree because several waste-to-energy facilities have received rulings from the Division of Air Quality of the North Carolina Department of Environment and Natural Resources that they are not subject to the restrictions applicable to solid waste incinerators. Witness Lucas further stated that most of the contractual issues relating to change of law have largely been addressed and the difficulties with interconnection agreements have for the most part been resolved.
In its determination that the effective dates of the poultry and swine waste set-asides should again be delayed, the Commission initially notes that its authority under G.S. 62-133.8(i)(2) "to modify or delay the provisions of subsections (b), (c), (d), (e), and (f) of [G.S. 62-133.8) in whole or in part" may be exercised only if the electric power suppliers requesting the modification or delay "demonstrate that [they] made a reasonable effort to meet the requirements set out" in the statute. In this case, the evidence demonstrates that the electric power suppliers made reasonable efforts to comply with their 2013 poultry and swine waste set-aside requirements. However, no supplier is able to comply with the 2013 swine waste set-aside requirement and a limited few are in a position to comply with the 2013 poultry waste set-aside requirement. Witnesses Maier and Lucas expressed some concern as to whether certain suppliers' compliance efforts might have been GENERAL ORDERS – ELECTRIC
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more vigorous and extensive, but neither contended that any supplier failed to make a reasonable effort. The Commission concludes that the limited availability of poultry waste RECs, and the near unavailability of swine waste RECs, resulted in a scenario in which compliance could not be achieved. The primary cause of these limitations is the immature and undeveloped state of the technology of electric power generation from poultry and swine waste. Many states have adopted renewable energy portfolio standards, however, North Carolina is the only state with set­aside requirements for energy generated from swine or poultry waste. Witnesses Byrd, Fusco and Nemeth testified that almost every developer that agreed to provide power from poultry or swine waste had to postpone startup dates or abandon the projects entirely.
The evidence shows little disagreement regarding other causes of the electric power suppliers' difficulty with compliance in 2013. Witnesses Byrd, Fusco and Lucas all noted that new legislative developments affecting the poultry waste set-aside have resulted in uncertainty and delays, although they have also provided suppliers with new ways of complying with the set-aside. Witness Lucas further testified that there have been disputes about the terms and conditions of REC purchase agreements and disagreements and misunderstandings as to the interconnection of facilities. The testimony of these witnesses was not contradicted by any party.
The Commission notes that despite setbacks, which are inevitable with the development of a new technology, several of the State's waste-to-energy developers are making significant strides. Witness Byrd testified that many developers have made significant progress and are close to having their facilities on line. Additionally, witness Byrd stated that DEP is in a position to comply with its 2013 poultry waste set-aside requirement. Witness Fusco stated that the ReVenture project was expected to begin producing poultry waste RECs by the end of 2013; witness Nemeth indicated that GreenCo is purchasing a small amount of in-state swine waste RECs; and witness Lanier testified that the Revolution Energy swine waste plant in Magnolia is scheduled to come on line in the near future.
EVIDENCE AND CONCLUSIONS FOR FINDINGS OF FACT 7-9
The evidence supporting these findings of fact appear in the testimony of DNCP witness Muchhala and Power Agencies witness Fusco.
DNCP witness Muchhala testified that, despite the fact that DNCP is in compliance with the 2013 poultry waste set-aside requirements and the Town of Windsor has acquired some poultry waste RECs, their compliance schedule should be delayed uniformly with the other electric power suppliers. Witness Muchhala further testified that DNCP should be allowed to bank its already acquired RECs for future use. Witness Muchhala contended that this approach maintains fairness among the electric power suppliers and is appropriate because the poultry waste set-aside requirement is a joint annual compliance requirement to be achieved by all the electric power suppliers.
Power Agencies witness Fusco testified that, if any electric power supplier is granted a delay to the 2013 poultry and swine waste set-aside requirements, the same relief should be granted to those electric power suppliers capable of whole or partial compliance. Witness Fusco stated that if suppliers that incurred costs in good faith to acquire poultry and swine waste RECs are required GENERAL ORDERS – ELECTRIC
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to retire those RECs in 2013, while those suppliers who acquired no RECs are excused from compliance, the practical effect is that the suppliers who purchased RECs will be penalized for good faith efforts to comply with the requirements.
No party offered testimony in opposition to the contentions of witnesses Muchhala and Fusco.
In the 2012 Delay Order the Commission modified the 2012 poultry and swine waste set-aside requirements uniformly for all parties, including those that were able to fully or partially comply with the set-asides, as well as those that had not acquired any swine or poultry waste RECs. Further, the Commission allowed parties that had acquired RECs to bank them for compliance in future years. The Commission directed all electric power suppliers to continue to make efforts to purchase any reasonably priced poultry and swine waste RECs that were available. These procedures are fair to all parties and are not opposed by any party to this proceeding. Further, the nature of the poultry and swine waste set-aside requirements, as aggregate requirements, would render compliance planning exceedingly complex were different electric power suppliers held to different compliance schedules. Consequently, the Commission will adopt the same procedures for use in this proceeding. However, the Commission notes that, as poultry and swine waste RECs become more readily available and more electric power suppliers are able to comply with the requirements, the Commission reserves the right to revisit the uniform application of compliance delays in potential future proceedings if the Commission finds it necessary to do so.
EVIDENCE AND CONCLUSIONS FOR FINDINGS OF FACT 10-11
The evidence supporting these findings of fact appear in the testimony of Public Staff witness Lucas, Pork Council witness Maier, Fayetteville witness Lynch, and Power Agencies witness Fusco.
Public Staff witness Lucas testified that the triannual progress reports, currently filed by DEC and DEP pursuant to Ordering Paragraph No. 4 of the Commission's 2012 Delay Order, should also be filed by DNCP, TVA, Fayetteville, the Power Agencies, and GreenCo. He stated that this requirement would provide greater transparency as to these suppliers' compliance efforts. On cross-examination and redirect, witness Lucas testified that the triannual progress reports should not only include the names of developers with whom a supplier has had discussions and the reasons why these discussions did or did not lead to a REC purchase contract, but should also include some degree of detail as to each developer's proposal. In witness Lucas’ opinion, the preparation of an electric power supplier's initial progress report will require some effort. However, subsequent reports should be relatively easy to prepare since the electric power supplier can use its first report as a template and insert new information or delete outdated material as needed.
Pork Council witness Maier testified that the triannual reports should be filed by all electric power suppliers. Witness Maier stated that these reports include useful information about the suppliers' compliance efforts, provide additional incentive for the suppliers to focus on compliance with the poultry and swine waste set-asides, and give interested parties an opportunity to intercede if necessary. Further, witness Maier suggested that periodic stakeholder meetings would help reduce uncertainty by displaying a commitment on the part of developers and the electric power suppliers. GENERAL ORDERS – ELECTRIC
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Power Agencies witness Fusco stated that he did not believe the electric power suppliers, other than DEC and DEP, should be required to file triannual reports. Witness Fusco stated that DEC and DEP agreed to file these reports in a settlement agreement in the 2012 proceeding. However, the other electric power suppliers were not parties to the settlement agreement and never agreed to file the reports. Witness Fusco stated that electric power suppliers already file annual compliance plans and compliance reports, and additional reporting requirements would be overly burdensome and would not produce any additional RECs. Witness Fusco stated that, in his opinion, the only obligation of the electric power suppliers under G.S. 62-133.8 is to acquire the number of RECs specified in the statute; they are not required to actively support and assist in the development of renewable energy.
On cross-examination, witness Fusco stated that the labor costs required to compile a triannual report and have it reviewed by the Power Agencies' legal staff would be significant, amounting to about $1,000. He agreed that the triannual reports would help keep the Commission abreast of the electric power suppliers' compliance efforts and would provide the electric power suppliers with an opportunity to bring their concerns forward to the Commission. Witness Fusco stated that the Power Agencies' annual compliance reports and compliance plans are filed in September and their off-ramp motion this year was also filed in September. Witness Fusco acknowledged that for the rest of the year, if they are not required to file triannual reports, the Power Agencies will not make any information available about their compliance activities.
Fayetteville witness Lynch testified that Fayetteville should not be burdened with preparing triannual reports because it is a small supplier and its efforts to comply with the poultry and swine waste set-aside requirements are limited to participating in purchasing collaboratives. On cross-examination, witness Lynch agreed that swine and poultry production are important industries to the State's economy that produce an undesirable waste product, and that in enacting G.S. 62-133.8(e) and (f) the General Assembly hoped to create a way of disposing of this waste product while producing useful electric power. He further acknowledged that to achieve this goal the electric power suppliers and the waste-to-energy developers must cooperate in good faith, and, in particular, they must communicate with each other.
Whether to require triannual reports from electric power suppliers other than DEC and DEP is the only contested issue before the Commission in this proceeding. In this matter the Commission agrees with the Public Staff and the Pork Council. The triannual reports filed this year by DEC and DEP have been valuable to the Commission. The filing of similar reports by DNCP, GreenCo, Fayetteville, EnergyUnited, Halifax and the Power Agencies should likewise provide helpful information on their compliance activities; should help keep the Commission informed on whether progress is continuing toward making the generation of power from poultry and swine waste a practical reality; and should assist the Commission in ruling on similar future motions, if necessary. Further, the filing of triannual reports will provide regular notice to the Commission of electric power suppliers’ compliance, or lack thereof, with the poultry and swine waste set-aside requirements, rather than the Commission relying upon the electric power suppliers to file motions for relief, which have occurred late in the calendar year.
As witnesses Fusco and Lynch pointed out, the electric power suppliers will incur some costs in preparing triannual reports; however, the Commission agrees with witness Lucas that a GENERAL ORDERS – ELECTRIC
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supplier's second and subsequent reports will be less time-consuming and expensive than its first one. The Commission does not find this to be an unreasonable expense for larger electric power suppliers. The Commission has taken the cost of the reports into account, however, in choosing to exempt the smallest suppliers from the reporting obligation.
Accordingly, the Commission concludes that DNCP, GreenCo, Fayetteville, EnergyUnited, Halifax and the Power Agencies, as well as DEC and DEP, should be required to file the verified triannual Progress Reports required by Ordering Paragraph No. 4 of the Commission's 2012 Delay Order. Further, the Public Staff is requested to arrange and facilitate two stakeholder meetings a year during 2014 and 2015 that shall be attended by the electric power suppliers that are subject to the triannual reporting requirement. The purpose of the stakeholder meetings is to encourage communication between electric power suppliers and developers and to discuss potential obstacles to achieving compliance with the poultry and swine waste set-aside requirements and options for addressing them.
IT IS, THEREFORE, ORDERED as follows:
1. That the 2013 requirement of G.S. 62-133.8(e), as established in the Commission’s 2012 Delay Order, is delayed for one year. The electric power suppliers, in the aggregate, shall comply with the requirements of G.S. 62-133.8(e) according to the following schedule:
Calendar Year Requirement for Swine Waste Resources
2014-2015 0.07%
2016-2018 0.14%
2019 and thereafter 0.20%
2. That the 2013 requirement of G.S. 62-133.8(f), as established in the Commission’s 2012 Delay Order, is delayed for one year. The electric power suppliers, in the aggregate, shall comply with the requirements of G.S. 62-133.8(f) according to the following schedule:
Calendar Year Requirement for Poultry Waste Resources
2014 170,000 megawatt-hours
2015 700,000 megawatt-hours
2016 and thereafter 900,000 megawatt-hours
3. That the Public Staff is requested to arrange and facilitate two stakeholder meetings a year during 2014 and 2015. The electric power suppliers that are subject to the triannual filing requirement (as discussed herein) shall attend. Developers and other stakeholders are encouraged to participate and discuss potential obstacles to achieving the swine and poultry waste requirements and options for addressing them.
4. That the triannual filing requirement first required by the Commission’s 2012 Delay Order and that now applies to DEP and DEC shall apply to DNCP, GreenCo, Fayetteville, EnergyUnited, Halifax, NCEMPA and NCMPA1. The reports to be filed shall be due to the Commission on each May 1, September 1, and January 1, until the Commission finds that they are GENERAL ORDERS – ELECTRIC
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no longer necessary. The filing requirements shall be as specified in ordering paragraph 4 of the Commission’s 2012 Delay Order.
ISSUED BY ORDER OF THE COMMISSION
This the __26th ___ day of March, 2014.
NORTH CAROLINA UTILITIES COMMISSION
Paige J. Morris, Deputy Clerk
DOCKET NO. E-100, SUB 113
BEFORE THE NORTH CAROLINA UTILITIES COMMISSION
In the Matter of
Rulemaking Proceeding to Implement Session Law 2007-397
)
)
)
ORDER MODIFYING THE SWINE
WASTE SET-ASIDE REQUIREMENT
AND PROVIDING OTHER RELIEF
BY THE COMMISSION: On August 28, 2014, a joint motion to modify and delay the 2014 requirements of G.S. 62-133.8(e) was filed by Duke Energy Carolinas, LLC (DEC);1 Duke Energy Progress, Inc. (DEP);2 Virginia Electric and Power Company, d/b/a Dominion North Carolina Power (Dominion);3 GreenCo Solutions, Inc. (GreenCo); Public Works Commission of the City of Fayetteville (Fayetteville); EnergyUnited Electric Membership Corporation (EnergyUnited); Halifax Electric Membership Corporation (Halifax); the Tennessee Valley Authority (TVA);4 North Carolina Eastern Municipal Power Agency (NCEMPA);5 and North Carolina Municipal Power Agency Number 1 (NCMPA1)6 (hereinafter referred to collectively as the Joint Movants). The Joint Movants requested that the Commission relieve them of compliance with G.S. 62.133.8(e) (Compliance With [North Carolina’s Renewable Energy and Energy
1 DEC asserted that it is also acting in its capacity as REPS compliance aggregator for Blue Ridge Electric Membership Corporation (EMC), Rutherford EMC, the City of Dallas, Forest City, City of Concord, the Town of Highlands and the City of Kings Mountain.
2 DEP asserted that it is also acting in its capacity as REPS compliance aggregator for the Towns of Sharpsburg, Lucama, Black Creek, and Stantonsburg, and the City of Waynesville.
3 Dominion asserted that it is also acting in its capacity as REPS compliance aggregator for the Town of Windsor.
4 TVA asserted that it is acting in its capacity as REPS compliance aggregator for Blue Ridge Mountain EMC, Mountain Electric Cooperative, Tri-State EMC and Murphy Electric Power Board.
5 NCEMPA asserted that it is acting in its capacity as REPS compliance aggregator for its 32 member municipalities which are electric power suppliers.
6 NCMPA1 asserted that it is acting in its capacity as REPS compliance aggregator for its 19 member municipalities which are electric power suppliers. GENERAL ORDERS – ELECTRIC
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Efficiency Portfolio Standard (REPS)] Requirement Through Use of Swine Waste Resources) by delaying their need to comply with this requirement by one year until 2015. The joint motion further requested that the Commission allow the Joint Movants to bank any swine renewable energy certificates (RECs) previously or subsequently acquired for use in future compliance years, and allow the Joint Movants to replace compliance with the swine waste requirements in 2014 with other compliance measures pursuant to G.S. 62-133.8(b), (c), and (d). The Joint Movants requested that the Commission consider and approve their joint motion without an evidentiary hearing.
The Joint Movants stated that they have individually and collectively made reasonable efforts to comply with the REPS swine waste resource provisions, and that the relief sought is in the public interest. The Joint Movants identified a number of actions taken to display their efforts to comply. Specifically, these actions, according to the Joint Movants, included actively engaging swine waste-to-energy developers, issuing requests for proposals, evaluating bids received, negotiating and executing long-term REC purchase agreements for these resources, processing interconnection requests from these generators, actively monitoring executed agreements, and, in some cases, further modifying REC purchase agreements to provide developers reasonable opportunity for successful project execution.
On September 17, 2014, the Commission issued an Order Requesting Comments in the above captioned docket, requesting that interested parties file comments on the Joint Movants’ request on or before Friday, October 10, 2014. On October 9, 2014, Environmental Defense Fund (EDF) submitted comments. On October 10, 2014, the North Carolina Pork Council (NCPC) and the Public Staff submitted comments. No party submitted comments in opposition to the Joint Movants’ request to delay the swine waste set-aside requirement.
EDF, in its comments, did not challenge the Joint Movant’s request to delay the swine waste set-aside. EDF noted the increasing number of technologies by which swine waste may be converted to electricity, in particular, biogas. EDF stated that it does not support routine annual extensions and that they should not become the norm. EDF stated that the utilities should become more involved in the development of swine waste resources in future years to display that they have made a reasonable effort to comply with the swine waste set-aside requirement. EDF requested that the Commission (1) set forth enumerated milestones at which the utilities must publicly report to ensure that they remain on course for compliance and (2) require DEC and DEP to develop a stakeholder process to “scale” the requirement and establish subsequent deadlines. Finally, EDF attached to its comments an analysis completed by Duke University of options for collecting and using biogas generated from swine waste.
NCPC, in its comments, noted that this is the third straight year that the electric suppliers have asked to modify or delay compliance with the swine waste set-aside requirement. NCPC stated that it did not oppose the Joint Movants’ request, however, NCPC noted that not much progress towards compliance has been made and added recommendations which it felt could help move the electric suppliers closer to achieving compliance. Specifically, NCPC requested (1) that the tri-annual reporting requirements be continued; and (2) that the Public Staff evaluate the prices offered to assess the reasonableness of efforts to comply and conduct an analysis of the relevant market, including price. NCPC also noted the Duke University study attached to EDF’s comments GENERAL ORDERS – ELECTRIC
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as evidence that swine waste development, contrary to the claims of several electric power suppliers, can be done economically in North Carolina.
The Public Staff, in its comments, stated that it had reviewed the tri-annual reports as well as information obtained at stakeholder meetings. As a result of this review, the Public Staff stated its belief that the electric power suppliers, in general, are making a good faith effort to comply with the swine waste set-aside requirement. The Public Staff identified several problem areas affecting compliance including: interconnection; reluctance of farmers to sign long-term fuel supply agreements; the sunset of the federal production tax credit; uncertainty in contract fulfillment based on past lack of performance; air quality permit delays; issues in the anaerobic digestion process, including waste disposal; and the uncertainty caused by the previous delays to the swine waste set-aside requirement. The Public Staff noted potential solutions to these problems discussed at stakeholder meetings including: electric power suppliers and the public bearing more risk in swine waste facility construction and operation, and the allowance of back-up fuels to generate electricity for a period of time in which swine waste fuels may become unavailable. The Public Staff recommended that the Commission grant the Joint Movants’ request to delay the swine waste set-aside requirement until 2015. The Public Staff further recommended that the Commission allow electric power suppliers to bank any swine waste RECs previously or subsequently acquired for use in future compliance years. Finally, the Public Staff recommended that the Commission proceed in this matter without a hearing.
G.S. 62-133.8(i)(2) states that the Commission, in developing rules, shall:
Include a procedure to modify or delay the provisions of subsections (b), (c), (d), (e), and (f) of this section in whole or in part if the Commission determines that it is in the public interest to do so. The procedure adopted pursuant to this subdivision shall include a requirement that the electric power supplier demonstrate that it made a reasonable effort to meet the requirements set out in this section.
Commission Rule R8-67(c)(5) states:
In any year, an electric power supplier or other interested party may petition the Commission to modify or delay the provisions of G.S. 62-133.8(b), (c), (d), (e) and (f), in whole or in part. The Commission may grant such petition upon a finding that it is in the public interest to do so. If an electric power supplier is the petitioner, it shall demonstrate that it has made a reasonable effort to meet the requirements of such provisions.
The Commission has previously exercised this authority and delayed compliance with the swine waste set-aside requirement on two occasions, first as delineated in its November 29, 2012 Order Modifying the Poultry and Swine Waste Set-Aside Requirements and Granting Other Relief (2012 Delay Order), and a second time as delineated in its March 26, 2014 Final Order Modifying the Poultry and Swine Waste Set-Aside Requirements and Providing Other Relief (2013 Delay Order), both issued in Docket No. E-100, Sub 113.
Based on the tri-annual reports submitted by the electric power suppliers in Docket No. E-100, Sub 113A, the Joint Movants’ motion, the intervenors’ comments, and the entire record GENERAL ORDERS – ELECTRIC
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herein, the Commission finds that the State’s electric power suppliers have made a reasonable effort to comply with the 2014 statewide swine waste set-aside requirement established by G.S. 62-133.8(e), but will not be able to comply. Compliance with the set-aside requirements has been hindered by the fact that the technology of power production from swine waste continues to be in its early stages of development. Additional factors contributing to the inability to comply include interconnection issues, reluctance of farmers to sign long-term fuel supply agreements, uncertainty in contract fulfillment based on past lack of performance, and the uncertainty caused by the previous delays to the swine waste set-aside requirement, among others. No party presented evidence that the aggregate 2014 swine waste set-aside requirement could be met; nor did any party oppose the Joint Movants’ request. The Commission further finds that it is in the public interest to delay required compliance by the State’s electric power suppliers with the requirements of G.S. 62-133.8(e) for one year. Electric power suppliers that have acquired swine waste RECs for 2014 REPS compliance should be allowed to bank such RECs for swine waste set-aside requirement compliance in future years. Electric power suppliers should continue to make efforts to comply with the swine waste set-aside requirement as modified by this Order. In addition, all electric power suppliers subject to the tri-annual reporting requirements shall continue to file reports until the Commission orders that they be discontinued. Finally, it remains appropriate for the Public Staff to arrange and facilitate two stakeholder meetings during 2015.
The Commission does not find that good cause exists at the present time to grant EDF’s request that the Commission set forth enumerated milestones at which the utilities must publicly report and that the Commission require DEC and DEP to develop a stakeholder process to “scale” the swine waste set-aside requirement. The Commission, in the 2012 Delay Order, as modified by the 2013 Delay Order, has established a tri-annual reporting requirement to track compliance efforts relative to both the swine and poultry waste set-aside requirements throughout the year. The purpose of the reports is to provide the Commission with an accurate portrayal of compliance efforts throughout the year and the reports have proven useful in this capacity. The Commission finds that the tri-annual reporting requirement has proven to be an adequate method to track compliance efforts over a given year, and, thus, EDF’s request would result in unnecessary duplicative requirements.
IT IS, THEREFORE, ORDERED as follows:
1. That the 2014 requirement of G.S. 62-133.8(e), as established in the Commission’s 2013 Delay Order, is delayed for one year. The electric power suppliers, in the aggregate, shall comply with the requirements of G.S. 62-133.8(e) according to the following schedule:
Calendar Year Requirement for Swine Waste Resources
2015-2016 0.07%
2017-2019 0.14%
2020 and thereafter 0.20%
Electric power suppliers shall be allowed to bank any swine waste RECs previously or subsequently acquired for use in future compliance years and to replace compliance with the swine waste requirements in 2014 with other compliance measures pursuant to G.S. 62-133.8(b), (c), and (d). GENERAL ORDERS – ELECTRIC
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2. That the Public Staff is requested to arrange and facilitate two stakeholder meetings during 2015. The electric power suppliers that are subject to the triannual filing requirement (as discussed below) shall attend. Developers and other stakeholders are encouraged to participate and discuss potential obstacles to achieving the swine and poultry waste requirements and options for addressing them.
3. That the tri-annual filing requirement first required by the Commission’s 2012 Delay Order and that now, pursuant to the 2013 Delay Order, applies to DEP, DEC, Dominion, GreenCo, Fayetteville, EnergyUnited, Halifax, NCEMPA and NCMPA1 shall be due to the Commission on each May 1, September 1, and January 1, until the Commission finds that they are no longer necessary. The filing requirements shall be as specified in ordering paragraph 4 of the Commission’s 2012 Delay Order.
ISSUED BY ORDER OF THE COMMISSION.
This the __13th day of November, 2014.
NORTH CAROLINA UTILITIES COMMISSION
Gail L. Mount, Chief Clerk
DOCKET NO. E-100, SUB 134
BEFORE THE NORTH CAROLINA UTILITIES COMMISSION
In the Matter of
Filing Requirements for New Electric Generators
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ORDER AMENDING RULES AND REQUESTING COMMENTS ON ADDITIONAL PROPOSED RULE CHANGES
BY THE COMMISSION: On September 8, 2014, the Commission issued an Order Requesting Comments on Proposed Rule Changes in which it requested comments on proposed amendments to Commission Rules R8-61, R8-63, and R8-64. The proposed rule changes were intended to “facilitate more efficient review by government agencies and the general public of the potential environmental, cost, and fuel security impacts of proposed new electric generation facilities.”
Subsequently, the Commission received comments from Carolinas Public Gas Association, Greenville Utilities Commission, City of Rocky Mount, City of Wilson, City of Monroe and City of Shelby (Public Gas Systems); Dominion North Carolina Power (Dominion); North Carolina Sustainable Energy Association (NCSEA); and the Public Staff. Duke Energy Carolinas, LLC and Duke Energy Progress, Inc., jointly filed a letter stating that they had reviewed the proposed changes and had no comments.
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SUMMARY OF COMMENTS
Public Gas Systems
The Public Gas Systems assert that new gas-fueled power plants should be required to demonstrate that they have secured long-term firm gas supply and pipeline capacity prior to beginning construction. They note that North Carolina has experienced an increased demand for gas as a fuel for electric generation, and that “as this trend continues and new natural gas-fueled power plants are proposed, their impact on the natural gas market should be taken into account.” They state:
During normal operating and weather conditions, there is currently sufficient natural gas supply and pipeline capacity for electric generation facilities to operate without adverse impact to existing natural gas consuming customers. However, as reliance on natural gas for electric generation grows, the current market framework and infrastructure cannot ensure reliability, especially during extreme weather conditions.
The Public Gas Systems state further that they have seen many manufacturing customers that used natural gas year round close their operations.
This shift in the economy has changed their [the Public Gas Systems] load profile to be more sensitive to temperature changes, as a greater percentage of their customers now use natural gas for space and water heating rather than for manufacturing. In addition … [t]hey have less pipe in which line pack can be stored or used to accommodate demand fluctuations. They serve less geographic territory over which temperatures may differ to allow system gas to be re-distributed. And they have few interruptible customers that can be curtailed to manage demand swings. All of these factors have made gas supply management increasingly difficult for the Public Gas Systems.
Upon information and belief, many electric generation facilities do not purchase year-round firm pipeline capacity or enter into non-interruptible contracts so as to avoid the required demand charges and instead arrange by contract for delivery of natural gas “just-in-time” as needed – often at peak-energy-usage periods. This new entrant in the wholesale gas market has changed the supply and demand dynamics, with adverse impacts on the traditional market participants such as the Public Gas Systems.
An example of an adverse impact to the market occurred during the January and February 2014 “polar vortex” periods. During those times, temperatures plunged far below normal for several days, and the Public Gas Systems needed to buy additional natural gas and capacity on the spot market to meet their customers’ demand. During January 2014, Transco Zone 5 (North Carolina) gas prices averaged over $24 per dekatherm (Dt) per day, with seven days exceeding $40 per Dt, and a one-day spike of $118. This compares with the previous January in 2012 GENERAL ORDERS – ELECTRIC
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[sic] when the average daily price for the month was $4.42 per Dt. At least one Public Gas System had to purchase natural gas on the spot market in Zone 6 NNY at $123 per dekatherm.
. . .
This rulemaking docket for new electric generation facilities provide[s] the Commission with an opportunity to send a clear signal that future electric generation facilities will need to secure firm pipeline capacity and to participate in efforts to improve pipeline infrastructure and enhance long-term reliability.
The Public Gas Systems express support for rule changes proposed by the Commission that would require electric power supplier applicants for natural gas-fired facilities with a capacity of 300 megawatts (MW) or more to provide “a map showing the proximity of the facility to existing natural gas facilities; a description of dedicated gas facilities to be constructed to serve the facility and any filed agreements, service contracts, or tariffs for interstate pipeline capacity.” (Currently, this provision only applies to merchant facilities, not public utilities.) The Public Gas Systems also supported the proposed change that would require applications for certificates of public convenience and necessity (CPCN) qualifying co-generators and small power producers to include “the nature of the generating facility, including the type and source of its power or fuel.” The Public Gas Systems stated that this additional information will help reveal the extent that new generation facilities will impact the wholesale natural gas market as a whole and the collateral effects they may have on other market participants.
Similarly, the Public Gas Systems state that they support the proposed new requirement for new gas-fired generators owned by public utilities to file “a statement of how the facility would contribute to resource and fuel diversity, whether the facility would have dual-fuel capability, and how much fuel would be stored at the site.” They also supported the proposed requirement that applicants demonstrate arrangements made or planned to assure a dependable fuel supply.
Dominion
Dominion expresses concern that applicants would be required to provide detailed financial information 120 days prior to a CPCN filing. This is an existing requirement for facilities that are 300 MW or larger. The Commission’s proposed rule change would: (1) require all CPCN applications that are filed by public utilities to include the financial information, not just those for plants of 300 MW or more; and (2) allow the utility to file the information with the CPCN, rather than 120 days in advance (as is currently required pursuant to Rule R8-61 for plants 300 MW and larger).
Regarding Rule R8-63, which governs filing requirements for merchant plants, Dominion states that the current requirement in Section (e)(3) should be changed. This provision requires an applicant to pursue a certificate renewal if the applicant does not begin construction within two years after the date the Commission grants the certificate. Dominion stated that “the timeframe of two years for renewal of a CPCN may be better at three years or greater. The Company’s concern GENERAL ORDERS – ELECTRIC
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is that some permits take so long to obtain that if the certificate expires there could be additional delays of another 2 years to “‘re-obtain’” various permits.”
NCSEA
NCSEA makes several recommendations. The first relates to the existing filing requirements for small power producer CPCN applications and renewable energy registrations. NCSEA notes that both Rule R8-64(b)(2) and R8-66(b)(1)(iii) require the applicant to provide the facility’s “projected dependable capacity.” NCSEA states that it appears that renewable energy project developers are construing the phrase differently, depending on whether they are filing for a CPCN or registering as a renewable energy facility. NCSEA stated that when owners are registering renewable energy facilities that have intermittent capacity (wind and solar), they frequently interpret the phrase “projected dependable capacity” to mean “projected dispatchable capacity.” For non-dispatchable projects, owners are frequently reporting zero “projected dependable capacity.” In contrast, developers of wind and solar projects that apply for a CPCN frequently interpret “projected dependable capacity” to mean “maximum nameplate capacity,” according to NCSEA. Subsequently, applicants are providing the additional, more detailed information required under Rule R8-64 when a project’s nameplate capacity is more than 5 MW.
NCSEA, therefore, recommends that the Commission revise Rule R8-64(b)(2) so that it conforms to current practice by replacing the phrase “projected dependable capacity” with the phrase “maximum nameplate capacity.”
NCSEA notes that the Commission’s current CPCN rules for merchant plants allow developers to designate some information as confidential. Rule R8-63(c) states:
Confidential Information. If an applicant considers certain of the required information to be confidential and entitled to protection from public disclosure, it may designate said information as confidential and file it under seal. Documents marked as confidential will be treated pursuant to applicable Commission rules, procedures, and orders dealing with filings made under seal and with nondisclosure agreements.
NCSEA recommends that the Commission add this same provision to Rule R8-64, the rule addressing CPCN applications for small power producers and co-generators.
NCSEA recommends a revision to the notice provision of Rule R8-64(c)(1), which currently states:
The Commission will issue an order requiring the applicant to publish notice of the application once a week for four successive weeks in a daily newspaper of general circulation in the county where the generating facility is proposed to be constructed …
NCSEA notes that in many parts of the State, local daily newspapers of general circulation no longer exist, and that the General Assembly revised G.S. 62-82(a) during its 2013 session (Session Law 2013-410, Section 29) to remove the word “daily” from a parallel statutory GENERAL ORDERS – ELECTRIC
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requirement. NCSEA recommends that the Commission similarly remove the word “daily” from R8-64(c)(1).
NCSEA recommends that the Commission no longer require small power producer and co-generation facility developers to provide 12 copies of their applications, if the developer makes its filing electronically. Finally, NCSEA states that the current Rule R8-64 requires CPCN applications for small power producers and co-generators to include “a detailed explanation of the anticipated kilowatt and kilowatt-hour outputs, on-peak and off-peak, for each month of the year.” NCSEA recommends that the Commission’s rules be amended such that applicants would be required to state “the specific on-peak and off-peak hours underlying the applicant’s quantification of anticipated kilowatt and kilowatt-hour outputs.”
Public Staff
The Public Staff provides a “redline” of many minor but useful changes. In addition, the Public Staff proposes several substantive changes. First, the Public Staff suggests the following amendment to Rule R8-64 (CPCNs for small power producers and co-generators):
In addition to the information required above, an applicant who desires to enter into a contract for a term of 5 years or more for the sale of electricity and who will have a projected dependable capacity of 5 megawatts or more available for such sale or construct a solar photovoltaic facility with an alternating current (AC) capacity of 25 megawatts or greater shall include in the application the following three additional exhibits:1
NCSEA also references this rule provision via a footnote:
If the Commission is interested in making substantive changes, it could consider increasing the threshold to 10 or 20 megawatts. Some of NCSEA’s members have
1 These three exhibits require an applicant to file:
1. A statement detailing the experience and expertise of the persons who will develop, design, construct and operate the project to the extent such persons are known at the time of the application.
2. Information specifically identifying the extent to which any regulated utility will be involved in the actual operation of the project.
3. A statement obtained by the applicant from the electric utility to which the applicant plans to sell the electricity to be generated setting forth an assessment of the impact of such purchased power on the utility’s capacity, reserves, generation mix, capacity expansion plan, and avoided costs.
4. The most current available balance sheet of the applicant.
5. The most current available income statement of the applicant.
6. An economic feasibility study of the project.
7. A statement of the actual financing arrangements entered into in connection with the project to the extent known at the time of the application.
8. A detailed explanation of the anticipated kilowatt and kilowatt-hour outputs, on-peak and off-peak, for each month of the year.
9. A detailed explanation of all energy inputs and outputs, of whatever form, for the project, including the amount of energy and the form of energy to be sold to each purchaser.
10. A detailed explanation of arrangements for fuel supply, including the length of time covered by the arrangements, to the extent known at the time of the application. GENERAL ORDERS – ELECTRIC
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suggested that this might be an appropriate revision given the evolving North Carolina marketplace. Such a change would streamline more filings and, in turn, reduce the time spent by the clerk’s office reviewing filings to ensure all exhibits are attached and rule-compliant.
Further, the Public Staff recommends that Rule R8-64 be amended so that each electric utility would be required to “provide on its website a mailing address to which the application and notice should be mailed.” The Public Staff also recommends that Rule R8-64 be amended so that:
If the applicant does not file the affidavit of publication and certificate of service within six months of the Commission’s publication order, the Commission will automatically dismiss the application.
The Public Staff does not provide an explanation for this proposed change. The Public Staff recommended amending Rules R8-63 and 64 to clarify that applicants should provide the size of their proposed facilities in terms of megawatts of “alternating current.” The Public Staff also proposed to delete the annual progress reports required in Rule R8-64, “consistent with the comments filed by the Public Staff on July 29, 2014 in Docket No. E-100, Sub 113 that interconnection and construction progress reports should be filed by the utilities….”
The Public Staff recommends that, because CPCN applications for small power producers and co-generators under Rule R8-64 are not required to be filed by a member of the Bar of the State of North Carolina, the Commission should adopt an application form for this rule, as well as for Rule R8-65 (Report by Persons Constructing Electric Generating Facilities Exempt from Certification Requirements) and R8-66 (Registration of Renewable Energy Facilities; Annual Filing Requirements). In addition, the Public Staff recommends that the Commission merge the requirements of Rules R8-64 and 65 so that a facility owner “can seek the benefits of R8-66 and 64 or 65 with one application.”
DISCUSSION AND CONCLUSIONS
The Commission has carefully considered the Public Gas Systems’ recommendation that all new gas-fueled electric generation facilities be required to secure long-term firm gas supplies and pipeline capacity. While at first blush this recommendation appears to have merit, the Commission notes that the Public Gas Systems appear to be criticizing electric generators for engaging in gas purchasing practices that they themselves also follow. Specifically, purchasing gas and pipeline capacity on the spot market when “absolutely necessary” because of extreme weather events that were not contemplated and which do not occur often. Second, some gas-fired electric generators are peaking plants, and might only be needed to serve customers during the summer when air conditioning use is high. At such times, gas capacity tends to be available, even on the spot market. The fuel procurement practices for an electric generating plant should mirror the role that the plant will play in the public utility’s fleet of plants. It might not be necessary for every natural gas-fired plant to have 20-year firm supply and pipeline capacity commitments. The rule changes that the Commission proposed in its September 8, 2014 Order include new requirements for electric public utilities to include in their CPCN applications:
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A statement of how the facility would contribute to resource and fuel diversity, whether the facility would have dual-fuel capability, and how much fuel would be stored at the site.
They would also be subject to this new requirement:
In the case of natural gas-fired facilities, a map showing the proximity of the facility to existing natural gas facilities; a description of dedicated gas facilities to be constructed to serve the facility; and any filed agreements, service contracts, or tariffs for interstate pipeline capacity …
The Commission concludes that these new provisions should be adequate to ensure that fuel supply issues are thoroughly discussed during the CPCN process for new electric generators. In addition, if the Commission were to adopt the Public Gas Systems’ recommendation, there is a real possibility that electric utilities and their customers would be paying more and the Public Gas Systems and their customers would be paying less for pipeline capacity than is fair. It is the responsibility of the Public Gas Systems to ensure that there is adequate pipeline capacity available to serve their firm, heat-sensitive customers, even on the coldest of days. The Public Gas Systems should not rely on the Commission to order electric utilities to contract for excess gas pipeline capacity, which would result in additional costs being passed onto utility electric ratepayers to the benefit of Public Gas Systems’ customers. Therefore, the Commission will decline to adopt the Public Gas Systems’ recommendation that all new gas-fueled electric generation facilities be required to secure long-term firm gas supplies and pipeline capacity.
Regarding Dominion’s suggestion that the deadline for beginning construction pursuant to a CPCN be extended from the current two years to three years for merchant developers, the Commission finds this suggestion to be reasonable given the complexities of securing all of the permits needed for a generating facility, and will adopt Dominion’s recommendation. As to Dominion’s concerns regarding an applicant’s obligation to file financial information, the changes being approved today would actually ease that requirement somewhat. Today, applicants seeking approval for a plant of 300 MW or more must file financial information 120 days in advance of their CPCN application. Under the changes approved today, that information would become part of the CPCN application itself.
The Commission carefully considered the recommendations made by NCSEA. NCSEA suggests amending Rule R8-64(b)(2) so that applicants would be reporting their “maximum nameplate capacity.” The Commission finds that it would be instructive and helpful to have a proposed facility’s capacity reported both in terms of maximum nameplate capacity and in terms of projected dependable capacity, as the rule requires today. The Commission will, therefore, add that requirement and clarify that applicants should provide the information as megawatts alternating current, as discussed below.
The Commission agrees with NCSEA’s recommendation that would allow small power producers and co-generators to designate some information as confidential, as well as its suggestion to remove the requirement to provide notice via a daily newspaper. The Commission will adopt those proposed changes. NCSEA’s recommendation that these applicants also be GENERAL ORDERS – ELECTRIC
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relieved of filing paper copies if they file electronically is unnecessary. Commission Rule R1-28(b) provides that, with limited exceptions, those making electronic filings do not need to also file paper copies. Finally, NCSEA recommends that Rule R8-64 be amended so that applicants include the specific hours that they consider to be on-peak and off-peak. The Commission finds that this recommendation has merit and will adopt it.
The Commission has reviewed the comments as well as the proposed rule changes submitted by the Public Staff. The Public Staff provides many minor but useful edits that the Commission will adopt. In addition, the Public Staff proposed several substantive changes. In terms of the Public Staff’s proposal to raise the threshold in Rule R8-64(b)(2) that triggers the need for solar photovoltaic developers to file additional information, the Commission supports this change and agrees with NCSEA that such a change would streamline the process. However, the Commission will re-word the change somewhat to be more clear, as shown below:
In addition to the information required above, Aan applicant who desires to enter into a contract for a term of 5 years or more for the sale of electricity, and whose facility will have a projected dependable nameplate capacity of 5 megawatts alternating current or more, and whose facility is not a solar photovoltaic facility, available for such saleshall include in the application the following information and three additional exhibits: as described in R8-64(b)(6)(i), (ii), and (iii) below, except that an applicant who desires to enter into a contract of 5 years or more for the sale of electricity from a solar photovoltaic facility of 25 megawatts alternating current or more shall also include the three additional exhibits referenced herein.
The Public Staff recommended amending Rules R8-63 and 64 to clarify that applicants should provide the size of their proposed facilities in terms of megawatts of “alternating current.” The Commission will adopt those changes but also seeks comments as to whether it would be preferable to instead amend Commission Rule R8-2, so that all capacity reporting under Rule R8 (Electric Light & Power) would be in terms of alternating current, as shown below:
Rule R8-2. DEFINITIONS.
In the interpretation of these rules the word "utility" shall be taken to mean any person, firm or corporation engaged in the business of supplying electric current to domestic, commercial, or industrial users within this State except a municipality or electric membership corporation organized under G.S. 117-6 et seq. and the word "consumer" shall be taken to mean any person, firm, corporation, municipality, or other political subdivision of the State supplied by any such utility. Unless specifically stated otherwise, capacity of generation facilities is provided in alternating current (AC) delivered at the point of interconnection to the distribution or transmission facilities.
The Public Staff submits substantial changes to Rules R8-65 and R8-66, which are beyond the scope of the Commission’s September 8, 2014 Order. Therefore, the Commission will ask the Public Staff to file additional information explaining the need for these changes. The Commission specifically welcomes the Public Staff providing more information on how the requirements of GENERAL ORDERS – ELECTRIC
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Rules R8-64 and 65 could be “merged.” The Public Staff is also invited to file additional information as to the need to dismiss applications under Rule R8-64 after six months if an applicant has not yet filed its affidavit showing publication of notice.
Finally, the Public Staff proposes to delete the annual progress reports required in Rule R8-64(e). The Commission will decline to address that issue in this proceeding, as it is pending in Docket No. E-100, Sub 113.
IT IS, THEREFORE, ORDERED as follows:
1. That, consistent with the findings in this Order and as provided in Appendix A (black-lined) and Appendix B (changes incorporated), the Commission hereby amends Rules R8-61, 63 and 64, effective January 1, 2015;
2. That the Public Staff is requested to file an explanation of its proposed changes to Rules R8-65 and 66, on or before December 15, 2014;
3. That other parties may also propose changes to Rules R8-65 and 66 on or before December 15, 2014;
4. That all parties are invited to comment on the Commission’s proposal to amend Rule R8-2 on or before December 15, 2014; and
5. That Parties may file reply comments on or before January 16, 2015.
ISSUED BY ORDER OF THE COMMISSION
This the _4th day of November, 2014.
NORTH CAROLINA UTILITIES COMMISSION
Gail L. Mount, Chief Clerk
APPENDIX A
PAGE 1 of 13
Rule R8-61. PRELIMINARY PLANS AND CERTIFICATES OF PUBLIC CONVENIENCE AND NECESSITY FOR CONSTRUCTION OF ELECTRIC GENERATION AND RELATED TRANSMISSION FACILITIES IN NORTH CAROLINA; CONSTRUCTION OF OUT-OF-STATE ELECTRIC GENERATING FACILITIES; PROGRESS REPORTS AND ONGOING REVIEWS OF CONSTRUCTION; PROJECT DEVELOPMENT COST REVIEWS FOR NUCLEAR GENERATING FACILITIES.
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(a) A public utility or other person that plans to build an electricity generating facility with a nameplate capacity of 300 megawatts (alternating current) or more shall file with the Commission and the Department of the Environment and Natural Resources its preliminary plans Information to be filed at least 120 or more days before the filing of an application, by a public utility or other person, for a certificate of public convenience and necessity. The preliminary plans for generating facilities with capacity of 300 MW or more shall include the following exhibits:
(1) Exhibit 1 shall contain the following site information:
(i) Available site information (including A color maps or aerial photo (a U.S. Geological Survey map or an aerial photo map prepared via the State’s geographic information system is preferred) and description), preliminary estimates of initial and ultimate development, a drawing showing the proposed site boundary and layout relative to the map, with all major equipment, including the generator, fuel handling equipment, plant distribution system, startup equipment, site boundary, planned and existing pipelines, planned and existing roads, planned and existing water supplies, and planned and existing electric facilities;
(2) (ii) The E911 street address, county in which the proposed facility would be located, and GPS coordinates of the approximate center of the proposed facility site to the nearest second or one thousandth of a degree;
(iii) The full and correct name of the site owner and, if the owner is other than the applicant, the applicant’s interest in the site;
(iv) Justification for the adoption of the site selected, and general information describing the other locations considered;
(3) (v) As appropriate, preliminary iInformation concerning geological, aesthetic, ecological, meteorological, seismic, water supply, and local population and general load center data to the extent known;
(4) A statement of the need for the facility, including information on loads and generating capability;
(5) (vi) A description of investigations completed, in progress, or proposed involving the subject site;
(6) (vii) A statement of existing or proposed plans known to the applicant of federal, state, local governmental and private entities for other developments at or adjacent to the proposed site;
APPENDIX A
PAGE 2 of 13
(7) A statement of existing or proposed environmental evaluation programs to meet the applicable air and water quality standards;
(viii) In the case of natural gas-fired facilities, a map showing the proximity of the facility to existing natural gas facilities; a description of dedicated gas facilities to be constructed to serve the facility; and any filed agreements, service contracts, or tariffs for interstate pipeline capacity;
GENERAL ORDERS – ELECTRIC
32
(ix) A brief general description of practicable transmission line routes emanating from the site, including a color map showing their general location; and
(x) The gross, net, and nameplate generating capacity of each unit and the entire facility’s total projected dependable capacity in alternating current (AC).
(2) Exhibit 2 shall contain the following permitting information:
(i9) A list of all agencies from which approvals will be sought covering various aspects of any generation facility constructed on the site and the title and nature of such approvals; and
(10) A statement of estimated cost information, including plans and related transmission capital cost (initial core costs for nuclear units); all operating expenses by categories, including fuel costs and total generating cost per net kWh at plant; and information concerning capacity factor, heat rate, and plant service life. Furnish comparative cost including related transmission cost of other final alternatives considered; and
(ii) A statement of existing or proposed environmental evaluation programs to meet the applicable air and water quality standards.
(3) Exhibit 3 shall include a:
(11) A schedule showing the anticipated beginning dates for construction, testing, and commercial operation of the generating facility.
(b) In filing an application for a certificate of public convenience and necessity pursuant to G.S. 62-110.1(a) in order to construct a generating facility in North Carolina, a public utility shall include the following information exhibits supported by relevant testimony:
(1) Exhibit 1 shall contain the following resource planning information:
(i1) The utility’s most recent biennial report and the most recent annual report (as defined in filed pursuant to Rule R8-60), of the utility plus any proposals by the utility to update said reports;
(ii2) The extent to which the proposed construction facility would conforms to the utility’s most recent biennial report and the most recent annual report (as defined in that was filed pursuant to Rule R8-60);
(iii3) A statement of how the facility would contribute to resource and fuel diversity, whether the facility would have dual-fuel capability, and how much fuel would be stored at the site. Support for any utility proposals to
APPENDIX A
PAGE 3 of 13
update its most recent biennial report and its most recent annual report (as defined in Rule R8-60);
(iv) An explanation of the need for the facility, including information on energy and capacity forecasts; and GENERAL ORDERS – ELECTRIC
33
(v) An explanation of how the proposed facility meets the identified energy and capacity needs, including the anticipated facility capacity factor, heat rate, and service life.
(2) Exhibit 2 shall contain
(4) Updates, if any, to the siting and permitting information as listed in Rule R8-61(a) information;, with updates as necessary for facilities that are 300 megawatts (alternating current) nameplate capacity or more, and for which this information had already been filed.
(3) Exhibit 3 shall contain the following cost information for the proposed facility, and for the final alternatives that the applicant considered:
(i5) An estimate of the construction costs for the generating facility, including the costs for new substation(s) and transmission line(s), and upgrades to existing substations(s) and transmission lines(s). For nuclear plants, construction costs shall include the plant’s first core fuel load;
(ii) Estimated construction costs expressed as dollars per megawatt of capacity;
(iii) Estimated annual operating expenses by category, including fuel costs;
(iv) Estimated annual operating expenses expressed as dollars per net megawatt-hour.
(v6) The projected cost of each major component of the generating facility and the projected schedule for incurring those costs;
(vi7) The projected effect of investment in the generating facility on the utility’s overall revenue requirement for each year during the construction period;
(vii) The anticipated in-service expenses associated with the generating facility for the 12-month period of time following commencement of commercial operation of the facility; and
(viii) The anticipated impact the facility will have on customer rates.
(4) Exhibit 4 shall contain the following construction information:
i. (8) The anticipated construction schedule for the generating facility;
ii. (9) The specific type of units selected for the generating facility; the suppliers of the major components of the facility; the basis for selecting the type of units, major components, and suppliers; and arrangements made or planned to assure a dependable the adequacy of fuel supply;
iii.(10)The qualifications and selection process of principal contractors and suppliers for construction of the generating facility, other than those listed in Item (9ii) above; and
APPENDIX A
PAGE 4 of 13
(11) Resource and fuel diversity and reasonably anticipated future operating costs, including the anticipated in-service expenses associated with the generating facility for the 12-month period of time following commencement of commercial operation of the facility; GENERAL ORDERS – ELECTRIC
34
iv.(12) Risk factors related to the construction and operation of the generating facility, including a verified statement as to whether the facility will be capable of operating during the lowest temperature that has been recorded in the area using information from the National Weather Service Automated Surface Observing System (ASOS) First Order Station in Asheville, Charlotte, Greensboro, Hatteras, Raleigh or Wilmington, depending upon the station that is located closest to where the plant will be located; and.
(5) If the facility is a coal or nuclear-fueled facility, the application shall include Exhibit 5, which shall contain
(13) If the application is for a coal or nuclear generating facility, information demonstrating that energy efficiency measures; demand-side management; renewable energy resource generation; combined heat and power generation; or any combination thereof, would not establish or maintain a more cost-effective and reliable generation system and that the construction and operation of the facility is in the public interest.
(c) The public utility shall submit a progress report and any revision in the construction cost estimate during each year of construction according to a schedule established by the Commission.
(d) Upon the request of the public utility or upon the Commission’s own motion, the Commission may conduct an ongoing review of construction of the generating facility as the construction proceeds.
(e) A public utility requesting an ongoing review of construction of the generating facility pursuant to G.S. 62-110.1(f) shall file an application, supported by relevant testimony, for an ongoing review no later than 12 months after the date of issuance of a certificate of public convenience and necessity by the Commission; provided, however, that the public utility may, prior to the conclusion of such 12-month period, petition the Commission for a reasonable extension of time to file an application based on a showing of good cause. Upon the filing of a request for an ongoing review, the Commission shall establish a schedule of hearings. The hearings shall be held no more often than every 12 months. The Commission shall also establish the time period to be reviewed during each hearing. The purpose of each ongoing review hearing is to determine the reasonableness and prudence of the costs incurred by the public utility during the period under review and to determine whether the certificate should remain in effect or be modified or revoked. The public utility shall have the burden of proof to demonstrate that all costs incurred are reasonable and prudent.
(f) A public utility may file an application pursuant to G.S. 62-110.6 requesting the Commission to determine the need for an out-of-state electric generating facility that is intended to serve retail customers in North Carolina. If need for the generating facility is
APPENDIX A
PAGE 5 of 13
established, the Commission shall also approve an estimate of the construction costs and construction schedule for such facility. The application may be filed at any time after an application for a certificate of public convenience and necessity or license for construction of the generating GENERAL ORDERS – ELECTRIC
35
facility has been filed in the state in which the facility will be sited. The application shall be supported by relevant testimony and shall include the information required by subsection (b) of this Rule to the extent such information is relevant to the showing of need for the generating facility and the estimated construction costs and proposed construction schedule for the generating facility. The public utility shall submit a progress report and any revision in the construction cost estimate for the out-of-state electric generating facility during each year of construction according to a schedule established by the Commission.
(g) If the Commission makes a determination of need pursuant to G.S. 62-110.6 and subsection (f) of this Rule, the provisions of subsections (d) and (e) of this Rule shall apply to a request by a public utility for an ongoing review of construction of a generating facility to be constructed in another state that is intended to serve retail customers in North Carolina. An electric public utility shall file an application, supported by relevant testimony, for an ongoing review no later than 12 months after the date of issuance of a certificate of public convenience and necessity or license by the state commission in which the out-of-state generating facility is to be constructed; provided, however, that the public utility may, prior to the conclusion of such 12-month period, petition the Commission for a reasonable extension of time to file an application based on a showing of good cause.
(h) A public utility may file an application pursuant to G.S. 62-110.7 requesting the Commission to review the public utility’s decision to incur project development costs for a potential in-state or out-of-state nuclear generating facility that is intended to serve retail electric customers in North Carolina. The application, supported by relevant testimony, shall be filed prior to the filing of an application for a certificate to construct the facility.
Rule R8-63. APPLICATION FOR CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY FOR MERCHANT PLANT; PROGRESS REPORTS.
(a) Scope of Rule.
(1) This rule applies to an application for a certificate of public convenience and necessity pursuant to G.S. 62-110.1(a) by any person seeking to construct a merchant plant in North Carolina.
(2) For purposes of this rule, the term "merchant plant" means an electric generating facility, other than one that qualifies for and seeks the benefits of 16 U.S.C.A. 824a-3 or G.S. 62-156, the output of which will be sold exclusively at wholesale and the construction cost of which does not qualify for inclusion in, and would not be considered in a future determination of, the rate base of a public utility pursuant to G.S. 62-133.
(3) Persons filing under this rule are not subject to the requirements of Rule R1-37 or Rule R8-61 or R8-64.
(b) Application.
GENERAL ORDERS – ELECTRIC
36
APPENDIX A
PAGE 6 of 13
(1) The application shall contain all of the exhibits listed below, which shall contain the information hereinafter required, with each exhibit and item labeled as set out below. Any additional information may be included at the end of the application.
(1) Exhibit 1 shall contain the following information about tThe aApplicant:
(i) The full and correct name, business address, and business telephone number and electronic mailing address of the applicant;
(ii) A description of the applicant, including the identities of its principal participant(s) and officers, and the name and business address of a person authorized to act as corporate agent or to whom correspondence should be directed; and
(iii) A copy of the applicant’s most recent annual report to stockholders, which may be attached as an exhibit, or, if the applicant is not publicly traded, its most recent balance sheet and income statement. If the applicant is a newly formed entity with little history, this information should be provided for its parent company, equity partner, and/or the other participant(s) in the project.; and
(iv) Information about generating facilities in the Southeastern Electric Reliability Council region which the applicant or an affiliate has any ownership interest in and/or the ability to control through leases, contracts, options, and/or other arrangements and information about certificates that have been granted for any such facilities not yet constructed.
(2) Exhibit 2 shall contain the following information about tThe proposed fFacility:
(i) The nature of the proposed generating facility, including its type, fuel, size, and expected service life, and the gross, net, and nameplate generating capacity of each generating unit and the entire facility, as well as the facility’s total projected dependable capacity, in megawatts (alternating current); the anticipated beginning date for construction; the expected commercial operation date; and estimated construction costs;
(ii) A detailed description of the location of the generating facility, including a color map or aerial photo (a U.S. Geological Survey map or aerial photo map prepared via the State’s geographic information system is preferred) showing the with the location marked;
(iii) A drawing showing the proposed site boundary and layout relative to the map provided pursuant to (B)(ii), with all major equipment, including the generator, fuel handling equipment, plant distribution system, startup equipment, site boundary,
GENERAL ORDERS

NORTH
CAROLINA
UTILITIES
COMMISSION
104th
REPORT
JAN. 1, 2014
DEC. 31, 2014 ONE-HUNDRED FOURTH REPORT
OF THE
NORTH CAROLINA
UTILITIES COMMISSION
ORDERS AND DECISIONS
ISSUED FROM
JANUARY 1, 2014 THROUGH DECEMBER 31, 2014
ONE-HUNDRED FOURTH REPORT
of the
NORTH CAROLINA UTILITIES COMMISSION
ORDERS AND DECISIONS
Issued from
January 1, 2014, through December 31, 2014
Edward S. Finley, Jr., Chairman
Bryan E. Beatty, Commissioner
Susan W. Rabon, Commissioner
ToNola D. Brown-Bland, Commissioner
Don M. Bailey, Commissioner
Jerry C. Dockham, Commissioner
James G. Patterson, Commissioner
North Carolina Utilities Commission
Office of the Chief Clerk
Gail L. Mount
4325 Mail Service Center
Raleigh, North Carolina 27699-4325
The Statistical and Analytical Report of the North Carolina Utilities Commission is printed separately from the volume of Orders and Decisions and will be available from the Office of the Chief Clerk of the North Carolina Utilities Commission upon order.
LETTER OF TRANSMITTAL
December 31, 2014
The Governor of North Carolina
Raleigh, North Carolina
Sir:
Pursuant to the provisions of Section 62-17(b) of the General Statutes of North Carolina, providing for the annual publication of the final decisions of the Utilities Commission on and after January 1, 2014, we hereby present for your consideration the report of the Commission's significant decisions for the 12-month period beginning January 1, 2014, and ending December 31, 2014.
The additional report provided under G.S. 62-17(a), comprising the statistical and analytical report of the Commission, is printed separately from this volume and will be transmitted immediately upon completion of printing.
Respectfully submitted,
NORTH CAROLINA UTILITIES COMMISSION
Edward S. Finley, Jr., Chairman
Bryan E. Beatty, Commissioner
Susan W. Rabon, Commissioner
ToNola D. Brown-Bland, Commissioner
Don M. Bailey, Commissioner
Jerry C. Dockham, Commissioner
James G. Patterson, Commissioner
Gail L. Mount, Chief Clerk
TABLE OF CONTENTS
TABLE OF ORDERS AND DECISIONS PRINTED .................................................................... i
GENERAL ORDERS .................................................................................................................... 1
GENERAL ORDERS -- ELECTRIC ...................................................................................... 1
E-100, SUB 111 (09/29/2014) ............................................................................................ 1
E-100, SUB 113 (03/26/2014) ............................................................................................ 4
E-100, SUB 113 (11/13/2014) .......................................................................................... 18
E-100, SUB 134 (11/04/2014) .......................................................................................... 22
E-100, SUB 137 (06/30/2014) .......................................................................................... 55
E-100, SUB 140 (12/31/2014) .......................................................................................... 98
GENERAL ORDERS -- TELECOMMUNICATIONS ....................................................... 159
P-100, SUB 133C (01/22/2014) ...................................................................................... 159
P-100, SUB 137C (08/13/2014) ...................................................................................... 194
P-100, SUB 170 (06/11/2014) ........................................................................................ 202
GENERAL ORDERS -- TRANSPORTATION .................................................................. 203
T-100, SUB 90 (10/08/2014) .......................................................................................... 203
T-100, SUB 93 (06/05/2014) .......................................................................................... 213
GENERAL ORDERS -- WATER AND SEWER ............................................................... 218
W-100, SUB 54 (06/06/2014) ......................................................................................... 218
ELECTRIC ............................................................................................................................... 235
ELECTRIC -- FILINGS DUE PER ORDER OR RULE .................................................... 235
E-22, SUB 489 (04/10/2014) ........................................................................................ 235
E-2, SUB 238 (02/05/2014) .......................................................................................... 236
ELECTRIC -- MISCELLANEOUS ................................................................................... 238
E-22, SUB 507 (10/27/2014) ........................................................................................ 238
E-7, SUB 1052 (08/21/2014) ........................................................................................ 242
ELECTRIC -- RATE SCHEDULES/RIDERS/SERVICE RULES
& REGULATIONS ........................................................................................................... 261
E-22, SUB 514 (12/11/2014) ........................................................................................ 261
E-7, SUB 1055 (08/13/2014) ........................................................................................ 272
E-2, SUB 1030 (01/23/2014) ........................................................................................ 275
E-2, SUB 1043 (11/21/2014) ........................................................................................ 302
ELECTRIC COOPERATIVES ................................................................................................ 313
ELECTRIC COOPERATIVES-- FILINGS DUE PER ORDER OR RULE ..................... 313
EC-82, SUB 15 (01/08/2014) ....................................................................................... 313
FERRYBOATS.......................................................................................................................... 315
FERRYBOATS -- CERTIFICATE .................................................................................... 315
A-75, SUB 0 (03/31/2014) ............................................................................................. 315
NATURAL GAS ...................................................................................................................... 318
NATURAL GAS -- DECLARATORY RULING .............................................................. 318
G-63, SUB 0 (07/01/2014) ............................................................................................. 318 TABLE OF CONTENTS
NATURAL GAS -- RATE SCHEDULES/RIDERS/SERVICE RULES
& REGULATIONS ........................................................................................................... 324
G-9, SUB 649 (10/29/2014) ........................................................................................... 324
G-5, SUB 545 (09/08/2014) ........................................................................................... 350
TELECOMMUNICATIONS .................................................................................................... 368
TELECOMMUNICATIONS -- COMPLAINT .................................................................. 368
P-10, SUB 877 (07/21/2014) ......................................................................................... 368
TELECOMMUNICATIONS -- DECLARATORY RULING ........................................... 373
P-118, SUB 192; P-16, SUB 257; P-31, SUB 159; P-1394, SUB 4;
P-1136, SUB 5; P-748, SUB 7; P-738, SUB 7; P-303, SUB 8;
P-561, SUB 30; P-785, SUB 4; P-1286, SUB 2; P-1455, SUB 2;
P-1348, SUB 2; P-1341, SUB 7; P-617, SUB 6; P-520, SUB 1;
P-1570, SUB 2 (10/13/2014) ......................................................................................... 373
TRANSPORTATION ................................................................................................................ 385
TRANSPORTATION -- COMMON CARRIER CERTIFICATE ..................................... 385
T-4537, SUB 0 (11/05/2014) ........................................................................................ 385
TRANSPORTATION -- COMPLAINT ............................................................................. 393
T-4523, SUB 1 (08/14/2014) ........................................................................................ 393
TRANSPORTATION -- FILINGS DUE PER ORDER OR RULE ................................... 396
T-4353, SUB 2 (01/23/2014) ........................................................................................ 396
TRANSPORTATION -- SHOW CAUSE .......................................................................... 399
T-4552, SUB 0; T-4510, SUB 2 (12/29/2014) ............................................................. 399
WATER AND SEWER ............................................................................................................ 403
WATER AND SEWER -- COMPLAINT ........................................................................... 403
W-1160, SUB 22 (08/07/2014) ...................................................................................... 403
WATER AND SEWER -- FILINGS DUE PER ORDER OR RULE ................................ 419
W-218, SUB 363A (12/22/2014) ................................................................................... 419
W-218, SUB 363A (12/22/2014) ................................................................................... 432
WATER AND SEWER -- MISCELLANEOUS ................................................................ 436
W-408, SUB 9 (10/01/2014) .......................................................................................... 436
WATER AND SEWER -- RATE INCREASE ................................................................... 446
W-1063, SUB 3 (09/15/2014) ........................................................................................ 446
W-354, SUB 336 (03/10/2014) ...................................................................................... 454
W-354, SUB 336 (07/01/2014) ...................................................................................... 511
WATER RESELLERS ............................................................................................................. 514
WATER RESELLERS -- COMPLAINT ............................................................................ 514
WR-1163, SUB 3 (12/05/2014) ..................................................................................... 514
INDEX OF ORDERS PRINTED .............................................................................................. 521
ORDERS AND DECISIONS LISTED ..................................................................................... 525 i
2014 ANNUAL REPORT OF ORDERS AND DECISIONS
OF THE
NORTH CAROLINA UTILITIES COMMISSION
TABLE OF ORDERS AND DECISIONS PRINTED
NOTE: For Printed General Orders, see Index on Page 521
PAGE
A Magic Move
T-4552, SUB 0; T-4510, SUB 2 – Order Accepting Consent Agreement
(12/29/2014) .................................................................................................................. 399
Absolute Moving & Storage, Inc.
T-4353, SUB 2 -- Order Ruling on Compliance Filing (01/23/2014) ............................... 396
Aqua North Carolina, Inc.
W-218, SUB 363A – Order Approving Water and Sewer System Improvement
Charges on a Provisional Basis and Requiring Customer Notice (12/22/2014) .......... 419
W-218, SUB 363A – Order Approving Secondary Water Quality
Improvement Projects (12/22/2014) ............................................................................ 432
C & P Enterprises, Inc.
W-1063, SUB 3 – Recommended Order Granting Increase in Rates and
Requiring Customer Notice (09/15/2014) .................................................................... 446
Carolina Telephone and Telegraph Company
P-10, SUB 877 – Order Granting CenturyLink’s Motion to Dismiss Complaint
for Lack of Jurisdiction (07/21/2014) .......................................................................... 368
Carolina Water Service, Inc. of North Carolina
W-354, SUB 336 – Order Granting Partial Rate Increase, Approving Rate
Adjustment Mechanism, and Requiring Customer Notice (03/10/2014) .................... 454
W-354, SUB 336 – Order Amending Prior Order to Correct Errors, Modifying
Sewer Rate Design, Implementing GRT Rate Changes, and Requiring
Refund Plan (07/01/2014) ............................................................................................. 511
Cross-State Development Corporation
W-408, SUB 9 – Order Appointing Emergency Operator and Approving
Increased Rates (10/01/2014) ....................................................................................... 436
ii
Dominion North Carolina Power; Virginia Electric & Power Co., d/b/a
E-22, SUB 489 – Order Accepting Registration of New Renewable Energy
Facility (04/10/2014) .................................................................................................... 235
E-22, SUB 507 – Order Approving Program (10/27/2014) ................................................ 238
E-22, SUB 514 – Order Approving REPS and REPS EMF Riders and
2013 REPS Compliance (12/11/2014) .......................................................................... 261
Duke Energy Carolinas, LLC
E-7, SUB 1052 – Order Approving REPS and REPS EMF Riders and
2013 REPS Compliance (08/21/2014) .......................................................................... 242
E-7, SUB 1055 – Order Approving Program (08/13/2014) ............................................... 272
Duke Energy Progress, Inc.
E-2, SUB 238 – Order Approving Modification of Sample Test Plan (02/05/2014) ........ 236
E-2, SUB 1030 – Final Order Approving DSM/EE Rider (01/23/2014) ........................... 275
E-2, SUB 1043 – Order Approving REPS and REPS EMF Riders and
2013 REPS Compliance (11/21/2014) ......................................................................... 302
EnergyUnited Electric Membership Cooperative
EC-82, SUB 15 – Order Approving Program Revisions (01/08/2014) ............................. 313
Island Express Ferry Service, LLC
A-75, SUB 0 – Order Granting Common Carrier Authority (03/31/2014) ....................... 315
KDHWWTP, L.L.C.
W-1160, SUB 22 – Order Ruling on Complaint (08/07/2014) ......................................... 403
Petroleum Fuel & Terminal Company
G-63, SUB 0 -- Order Finding Pipeline Safety Laws Applicable and Granting
a Special Permit on Conditions (07/01/2014) .............................................................. 318
Pick Up & Go Moving International
T-4523, SUB 1 – Order Scheduling Hearing, Clarifying Issues for
Hearing, and Dismissing Claim, in Part (08/14/2014) ................................................. 393
Piedmont Natural Gas Company, Inc.
G-9, SUB 649 – Order on Petition for Limited Waiver of Rate Schedule 106
Billing Procedures (10/29/2014) .................................................................................. 324
Public Service Company of North Carolina, Inc.
G-5, SUB 545 -- Order on Petition for Limited Modification of Rider A
and Request for Expedited Decision (09/08/2014) ..................................................... 350
iii
Sumare, LP
WR-1163, SUB 3 – Recommended Order Affirming Complaint in Part, Dismissing
In Part, Recalculating Ratepayer Bills, and Requiring Compliance with
Commission Rules (12/05/2014) ................................................................................. 514
White Glove Movers, LLC
T-4537, SUB 0 -- Order Ruling on Fitness and Show Cause Proceeding
(11/05/2014) ................................................................................................................ 385
Windstream North Carolina, LLC
P-118, SUB 192; P-16, SUB 257; P-31, SUB 159; P-1394, SUB 4; P-1136, SUB 5;
P-748, SUB 7; P-738, SUB 7; P-303, SUB 8; P-561, SUB 30; P-785, SUB 4;
P-1286, SUB 2; P-1455, SUB 2; P-1348, SUB 2; P-1341, SUB 7;
P-617, SUB 6; P-520, SUB 1; P-1570, SUB 2 – Declaratory Ruling
(10/13/2014) ................................................................................................................. 373
GENERAL ORDERS – ELECTRIC
1
DOCKET NO. E-100, SUB 111
BEFORE THE NORTH CAROLINA UTILITIES COMMISSION
In the Matter of
Rulemaking Proceeding to Consider Revisions to Commission Rule R8-60
on Integrated Resource Planning
)
)
)
ORDER REQUESTING
COMMENTS REGARDING
RULE R8-60 AMENDMENTS
BY THE COMMISSION: General Statute 62-110.1(c) and G.S. 62-2(a)(3a) set forth certain policies and requirements for integrated resource planning (IRP) in North Carolina. The Commission implements G.S. 62-110.1(c) and G.S. 62-2(a)(3a) through the provisions of Commission Rule R8-60. By order issued on October 19, 2006, in Docket No. E-100, Subs 103, 110, and 111, the Commission opened a rulemaking proceeding “to consider revisions in the IRP process provided in Commission Rule R8-60.”1 On November 27, 2006, the Commission issued an order requesting comments and reply comments on proposed revisions to the Rule. Based upon the consensus reached among the parties and the reasonableness of the parties' proposed revisions, on July 11, 2007, the Commission issued its Order Revising Integrated Resource Planning Rules that adopted the current Rule R8-60 covering the reporting requirements for both the biennial IRP reports and the annual update reports. In summary, the revised rule establishes different IRP reporting requirements for even-numbered years and odd-numbered years. Beginning in 2008, and every two years thereafter, the electric utilities are required to file a biennial report that includes comprehensive IRP information. Beginning in 2009, and every two years thereafter, the electric utilities are required to file an annual report that updates the information contained in their last biennial reports. Pursuant to Rule R8-60(j), the procedure for intervention, comments, reply comments and hearing requests is the same for biennial and annual reports, except that initial comments are due within 150 days after the filing of biennial reports, but only 60 days after the filing of annual reports. Subsection (j) further requires that one or more public witness hearings shall be scheduled by the Commission.
In the Commission's 2013 IRP proceeding, in Docket No. E-100, Sub 137, several parties filed comments regarding the annual IRP reports and procedures.
In its April 11, 2014 comments, the Public Staff noted that despite the Commission’s efforts to keep the IRP process within the established schedules, the annual IRP process has typically taken more than a year to complete. In addition, the Public Staff stated that the utilities have indicated that in order for Commission directives to be fully considered in their next IRPs they need to receive the inputs from the Commission in late spring or early summer prior to the next IRP filing deadline. Further, the Public Staff opined that the complexity of issues and sheer volume of information to be considered have resulted in a process that is sometimes disjointed and reactive, rather than constructive and deliberate. Therefore, the Public Staff believes that it may be appropriate to consider some changes to the IRP process to make it more robust and meaningful. Included among the changes considered by the Public Staff is a biennial process with less extensive
1 The October 19, 2006 order was prompted by recommendations made by a workgroup that was created by the Commission in connection with the 2005 IRP proceedings in Docket No. E-100, Sub 103. GENERAL ORDERS – ELECTRIC
2
information required, but with more stakeholder involvement in the development of the inputs and scenarios to be used. For example, the Commission could require the utilities to include certain common scenarios and sensitivities that will be of interest to all participants and allow for better comparison of alternatives. In order to do so, the Commission may wish to consider issuing expedited rulings on key inputs and assumptions in order to ensure that these items are received in time to be fully incorporated by the utilities in their modeling processes. In addition, comments and public hearings on the annual update reports could be required only at the discretion of the Commission.
The Public Staff recommended that the Commission request comments from the electric utilities and other parties on potential changes to the IRP process that may assist in making the process more robust and effective for all of the parties involved.
According to Duke Energy Carolinas, LLC, and Duke Energy Progress, Inc. (collectively, Duke) in their joint reply comments on May 23, 2014, the IRP process has expanded in scope over time through incremental annual IRP rulings, along with a growing number of special interest group intervenors participating in the IRP process. However, most of these intervenors focus only on issues of importance to their members or stakeholders. Further, they lack the obligation to provide reliable power delivery and the obligation for least cost planning on behalf of all Duke customers that the IRP planning process requires. In addition, Duke maintains that many of the individual issues now being raised by intervenors in the IRP dockets have their own focused regulatory proceedings. For example, the IRP clearly has overlap with EE, REPS, fuel, CPCN, avoided cost and rate case proceedings. However, the IRP was never intended to supplant or supersede these more focused proceedings. Duke further contends that several of the recommendations expressed by intervenors in their IRP comments are the same recommendations made within the context of the more focused proceedings. Thus, this moves the IRP process away from its main focus of long term planning toward more of a shorter term operational focus. Duke concludes by stating that it would be supportive of working toward productive revisions to the annual update process.
Dominion North Carolina Power (DNCP), in its May 23, 2014 reply comments, stated that it would welcome the opportunity to comment on the IRP process with an eye towards streamlining the annual updates to make them less burdensome. DNCP noted that its IRP process is ongoing and is designed to meet its biennial resource planning responsibilities in both Virginia and North Carolina. DNCP states that its IRP filing in Virginia is due on September 1 of each odd-numbered year. Thus, a streamlined update proceeding in North Carolina while DNCP is engaged in a full proceeding in Virginia would help DNCP maximize and conserve its planning resources.
Regarding stakeholder participation in the development of the utilities' IRPs, DNCP states that it does not believe a "North Carolina-wide" stakeholder process is necessary or would benefit each of the utilities in developing their IRPs. In addition, DNCP notes that its development of an IRP is a distinct process from Duke's planning process. However, DNCP does not oppose allowing up front input into its IRP process and has had a stakeholder review process in place in Virginia for several years. DNCP states that the Public Staff, Southern Environmental Law Center, Sierra Club and others routinely participate in its Virginia stakeholder review process and that this forum could be opened to other interested parties from North Carolina as well. GENERAL ORDERS – ELECTRIC
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In its June 30, 2014 Order Approving Integrated Resource Plan Annual Update Reports and REPS Compliance Plans, the Commission noted these issues and included the following conclusion in its Order:
The Commission understands the time and complexity concerns that the parties have with the current IRP planning process. Between the time extension requests and the increasing complexity of the issues raised during the proceedings, it makes for drawn out IRP timelines. The Commission agrees that some modifications might be warranted, especially to these odd-year annual update proceedings. For this reason, the Commission intends to open a future docket which will request comments and reply comments on the specific issues of what might be done to streamline the annual update reporting process so that it does not simply become another biennial proceeding with a different name.
Based on the foregoing and the record, the Commission is of the opinion that there is good cause to request comments from the Public Staff and all interested parties regarding possible revisions to the procedures that the Commission will employ in its review of the IRP annual reports filed in odd-numbered years. Further, the Commission finds good cause to specify that the Public Staff and other parties should address the following issues, in addition to any other points that they desire to comment upon.
(1) Whether the Public Staff should be the only party expressly allowed to file comments and recommendations about the annual reports?
(2) Whether the Commission should be required to make a finding of necessity before a public witness and/or evidentiary hearing is scheduled?
(3) Whether there are categories of information or particular subjects that are not necessary for inclusion in the annual reports?
(4) Whether there are procedures or methods that should be adopted to achieve more stakeholder involvement in the annual reports prior to the reports being filed with the Commission?
IT IS, THEREFORE, ORDERED as follows:
1. That this docket is hereby reopened. All filings related to this review of Commission Rule R8-60 shall be filed in this docket.
2. That all persons that previously intervened in this docket shall be entitled to participate in this docket without the necessity of filing a petition to intervene.
3. That on or before November 7, 2014, persons having an interest in this matter may file petitions to intervene.
4. That the Chief Clerk shall serve this Order Requesting Comments on all persons that previously intervened in this docket.
5. That on or before November 7, 2014, all parties may file initial comments. GENERAL ORDERS – ELECTRIC
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6. That on or before December 5, 2014, all parties may file reply comments.
ISSUED BY ORDER OF THE COMMISSION.
This the 29th day of September, 2014.
NORTH CAROLINA UTILITIES COMMISSION
Gail L. Mount, Chief Clerk
Commissioner James G. Patterson did not participate in this decision.
DOCKET NO. E-100, SUB 113
BEFORE THE NORTH CAROLINA UTILITIES COMMISSION
In the Matter of
Rulemaking Proceeding to Implement Session Law 2007-397
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FINAL ORDER MODIFYING THE POULTRY AND SWINE WASTE SET-ASIDE REQUIREMENTS AND PROVIDING OTHER RELIEF
HEARD: Tuesday, November 5, 2013, Commission Hearing Room 2115, Dobbs Building, 430 North Salisbury Street, Raleigh, North Carolina
BEFORE: Chairman Edward S. Finley, Jr., Presiding, and Commissioners Bryan E. Beatty, Susan W. Rabon, ToNola D. Brown-Bland, Jerry C. Dockham, and James G. Patterson
APPEARANCES:
For Duke Energy Carolinas, LLC, and Duke Energy Progress, Inc.:
Lawrence B. Somers, Deputy General Counsel, Duke Energy Corporation, P.O. Box 1551, NCRH 20, Raleigh, North Carolina 27602
For Dominion North Carolina Power, Inc.:
E. Brett Breitschwerdt and Mary Lynne Grigg, McGuireWoods LLP, 434 Fayetteville Street, Suite 2600, Raleigh, North Carolina 27601
For GreenCo Solutions, Inc.:
Richard M. Feathers, GreenCo Solutions, Inc., 3400 Sumner Boulevard, P.O. Box 27306, Raleigh, North Carolina 27611-7306
For North Carolina Eastern Municipal Power Agency and North Carolina Municipal Power Agency No. 1: GENERAL ORDERS – ELECTRIC
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Daniel C. Higgins, Burns, Day & Presnell, P.A., P.O. Box 10867, Raleigh, North Carolina 27605
For EnergyUnited Electric Membership Corporation:
Phillip Harris, Nelson Mullins Riley & Scarborough LLP, GlenLake One, Suite 200, 4140 Parklake Avenue, Raleigh, North Carolina 27612
For the Public Works Commission of the City of Fayetteville:
James P. West, West Law Offices, P.C., 434 Fayetteville Street, Suite 2325, Raleigh, North Carolina 27601
For the Tennessee Valley Authority:
Mark S. Calvert, Senior Attorney, Tennessee Valley Authority, 400 W. Summit Hill Drive, WT 6A, Knoxville, Tennessee 37902
For the North Carolina Sustainable Energy Association:
Michael D. Youth, North Carolina Sustainable Energy Association, 1111 Haynes St, Raleigh, North Carolina 27604
For Green Energy Solutions NV, Inc.:
R. Sarah Compton, PO Box 12728, Raleigh, North Carolina 27605
For the North Carolina Pork Council:
Kurt J. Olson, Law Office of Kurt J. Olson, 3737 Glenwood Avenue, Suite 100, Raleigh, North Carolina 27612
For North Carolina Poultry Federation, Inc:
Henry W. Jones, Jr., Jordan Price Wall Gray Jones & Carlton, 1951 Clark Avenue, Raleigh, North Carolina 27605
For the Using and Consuming Public:
Robert S. Gillam and Tim R. Dodge, Staff Attorneys, North Carolina Utilities Commission – Public Staff, 4326 Mail Service Center, Raleigh, North Carolina 27699-4326
BY THE COMMISSION: On November 29, 2012, in the above-captioned proceeding, the Commission issued an Order (2012 Delay Order) modifying the 2012 poultry and swine waste set-aside requirements under the State’s Renewable Energy and Energy Efficiency Portfolio Standard (REPS) established in G.S. 62-133.8. These requirements are set forth in subsections (e) and (f) of G.S. 62-133.8, establishing set-asides within the electric power suppliers’ overall renewable GENERAL ORDERS – ELECTRIC
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energy requirement. Pursuant to the 2012 Delay Order, the Commission eliminated the 2012 swine waste set-aside requirement for all electric power suppliers and delayed by one year the poultry waste set-aside requirement for all electric power suppliers. Consistent with that Order, the electric power suppliers, in the aggregate, were required to comply with the requirements of G.S. 62-133.8(e) according to the following schedule:
Calendar Year Requirement for Swine Waste Resources
2013-2014 0.07%
2015-2017 0.14%
2018 and thereafter 0.20%
Further, the electric power suppliers, in the aggregate, were required to comply with the requirements of G.S. 62-133.8(f) according to the following schedule:
Calendar Year Requirement for Poultry Waste Resources
2013 170,000 megawatt hours
2014 700,000 megawatt hours
2015 and thereafter 900,000 megawatt hours
On September 16, 2013, Duke Energy Carolinas, LLC (DEC);1 Duke Energy Progress, Inc. (DEP);2 Virginia Electric and Power Company, d/b/a Dominion North Carolina Power (DNCP);3 GreenCo Solutions, Inc. (GreenCo);4 the Public Works Commission of the City of Fayetteville (Fayetteville); EnergyUnited Electric Membership Corporation (EnergyUnited); Halifax Electric Membership Corporation (Halifax); and the Tennessee Valley Authority (TVA)5 (collectively, the Joint Movants) filed a Joint Motion to Modify and Delay the 2013 Requirements of N.C.G.S. 62-133.8(e) and (f) Due to Lack of Sufficient Swine and Poultry Waste (Joint Motion).
1 DEC asserted that it is also acting in its capacity as REPS compliance aggregator for Blue Ridge Electric Membership Corporation (EMC), Rutherford EMC, the City of Dallas, Forest City, the City of Concord, the Town of Highlands and the City of Kings Mountain.
2 DEP asserted that it is also acting in its capacity as REPS compliance aggregator for the towns of Sharpsburg, Lucama, Black Creek, and Stantonsburg, and the City of Waynesville.
3 Dominion asserted that it is also acting in its capacity as REPS compliance aggregator for the Town of Windsor.
4 In its September 3, 2013 REPS compliance plan in Docket No. E-100, Sub 113, GreenCo stated that its members are Albemarle EMC, Brunswick EMC, Cape Hatteras EMC, Carteret-Craven EMC, Central EMC, Edgecombe-Martin County EMC, Four County EMC, French Broad EMC, Haywood EMC, Jones-Onslow EMC, Lumbee River EMC, Pee Dee EMC, Piedmont EMC, Pitt & Greene EMC, Randolph EMC, Roanoke EMC, South River EMC, Surry-Yadkin EMC, Tideland EMC, Tri-County EMC, Union EMC and Wake EMC. GreenCo has stated that it also provides REPS compliance services for Broad River Electric Cooperative and Mecklenburg Electric Cooperative, and that the REPS requirements for the Town of Oak City are included in the requirements for Edgecombe-Martin County EMC.
5 TVA asserted that it is acting in its capacity as REPS compliance aggregator for Blue Ridge Mountain EMC, Mountain Electric Cooperative, Tri-State EMC and Murphy Electric Power Board. GENERAL ORDERS – ELECTRIC
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On September 20, 2013, the North Carolina Eastern Municipal Power Agency (NCEMPA)1 and North Carolina Municipal Power Agency Number 1 (NCMPA1)2 (collectively, the Power Agencies) filed a similar joint motion requesting that the Commission delay the 2013 poultry and swine waste set-aside requirements for one year (Power Agency Motion).
Both the Joint Movants and the Power Agencies requested that the Commission, pursuant to G.S. 62-133.8(i)(2), often referred to as the “off-ramp” provision of the REPS statute, grant relief from compliance with the 2013 poultry and swine waste set-aside requirements by ordering a one-year delay of both set-aside requirements. G.S. 62-133.8(i)(2) states that the Commission may modify or delay the provisions of subsections (b), (c), (d), (e), and (f) of G.S. 62-133.8 in whole, or in part, if the Commission determines that it is in the public interest to do so. General Statute 62-133.8(i)(2) requires that each electric power supplier requesting relief demonstrate that it made a reasonable effort to meet the requirements set out in the REPS statute.
On September 23, 2013, the Commission issued an Order Scheduling Hearing and Requiring Testimony setting the matter for hearing, establishing deadlines for filing testimony, and requiring the Joint Movants and Power Agencies to respond to questions posed by the Commission. The Order directed each electric power supplier, or its REPS compliance aggregator, to address: (1) the actions it has taken to meet the swine waste and poultry waste requirements; (2) the number of poultry and swine waste renewable energy certificates (RECs) it is currently required to retire for 2013 compliance; and (3) the number of poultry and swine waste RECs it anticipates that it will own by the end of 2013.
On October 11, 2013, DEC and DEP filed the direct testimony of Jonathan L. Byrd, Manager of Renewable Strategy and Compliance; DNCP filed the direct testimony of Chiman H. Muchhala, Manager of Market Operations; Halifax filed the direct testimony of Charles H. Guerry, Executive Vice President; EnergyUnited filed the direct testimony of Alec Natt, Chief Financial Officer; Fayetteville filed the direct testimony of Keith Lynch, Power Contracts and Regulatory Manager; NCEMPA and NCMPA1 filed the direct testimony of Andrew M. Fusco, Vice President of Member Planning and Corporate Services, ElectriCities of North Carolina, Inc.; GreenCo filed the direct testimony of Jason B. Nemeth, Director, Business Operations; and TVA filed the direct testimony of David B. DeHart, Program Manager, Renewable Energy.
On October 21, 2013, the Commission issued an Order Rescheduling Hearing, rescheduling the evidentiary hearing from November 6, 2013, to November 5, 2013.
1 According to its August 26, 2013 filing in Docket No. E-100, Sub 139, NCEMPA provides REPS compliance services for the following municipalities, which are also members of NCEMPA: Apex, Ayden, Belhaven, Benson, Clayton, Edenton, Elizabeth City, Farmville, Fremont, Greenville, Hamilton, Hertford, Hobgood, Hookerton, Kinston, LaGrange, Laurinburg, Louisburg, Lumberton, New Bern, Pikeville, Red Springs, Robersonville, Rocky Mount, Scotland Neck, Selma, Smithfield, Southport, Tarboro, Wake Forest, Washington, and Wilson. (The City of Wilson meets the REPS compliance requirements of the towns of Pinetops, Macclesfield, and Walstonburg.)
2 According to its August 26, 2013 filing in Docket No. E-100, Sub 139, NCMPA1 provides REPS compliance services for the following municipalities, which are also members of NCMPA1: Albemarle, Bostic, Cherryville, Cornelius, Drexel, Gastonia, Granite Falls, High Point, Huntersville, Landis, Lexington, Lincolnton, Maiden, Monroe, Morganton, Newton, Pineville, Shelby, and Statesville. GENERAL ORDERS – ELECTRIC
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On October 25, 2013, the Public Staff filed the testimony of Jay B. Lucas, Electric Engineer; the North Carolina Pork Council (Pork Council) filed the testimony of Angela W. Maier, Director of Policy Development and Communications; and the North Carolina Poultry Federation, Inc. (NCPF), filed the testimony of Summer Lanier, Public Relations Director, Prestage Farms, Inc.
On October 28, 2013, Green Energy Solutions NV, Inc., filed a written statement of position, but did not file testimony.
On November 1, 2013, the Power Agencies filed the rebuttal testimony of witness Fusco, and Fayetteville filed the rebuttal testimony of witness Lynch. Also on that date, Dominion filed a letter stating that it accepted Public Staff witness Lucas’ recommendations to approve the relief requested in the Joint Motion subject to the conditions outlined in witness Lucas’ testimony.
On November 5, 2013, the Commission issued an Order stipulating the testimony of Halifax witness Guerry and EnergyUnited witness Natt into evidence and excusing these witnesses from attending the hearing.
On November 5, 2013, the matter came on for hearing as scheduled. DEC and DEP presented the direct testimony of witness Byrd; TVA presented the direct testimony of witness DeHart; the Power Agencies presented the direct and rebuttal testimony of witness Fusco; Fayetteville presented the direct and rebuttal testimony of witness Lynch; the Pork Council presented the testimony of witness Maier; and the Public Staff presented the testimony of witness Lucas. The testimonies of GreenCo witness Nemeth, DNCP witness Muchhala, and NCPF witness Lanier were also stipulated into evidence and entered into the record at the opening of the hearing.
On November 12, 2013, DEC and DEP submitted a late-filed exhibit requested by Chairman Finley during the hearing.
On November 14, 2013, the Public Staff and NCMPA1 jointly submitted a late-filed exhibit requested by Chairman Finley during the hearing.
On November 26, 2013, NCPF and TVA each filed briefs. On November 27, 2013, the Power Agencies, the Public Staff, and the Joint Movants (excluding TVA) each filed proposed orders, the Pork Council filed a brief, and the North Carolina Sustainable Energy Association filed a letter supporting NCPF. Also on November 27, 2013, North Carolina Electric Membership Corporation filed a letter responding to the November 12, 2013 DEC/DEP late-filed exhibit.
On December 20, 2013, the Commission issued a Notice of Decision and Order stating that, due to the timing of the motions by the Joint Movants and the Power Agencies, it was not possible for the Commission to develop its complete order before the end of 2013, but that the Commission had made its decision in this docket. The Notice of Decision provided notice that the Commission would issue an order (1) delaying the 2013 requirements of G.S. 62-133.8(e) and (f), as established in the 2012 Delay Order, for one year; (2) requesting that the Public Staff arrange and facilitate two stakeholder meetings a year during 2014 and 2015; and (3) applying the triannual filing requirement first required by the 2012 Delay Order to DNCP, GreenCo, Fayetteville, EnergyUnited, Halifax, NCEMPA and NCMPA1. GENERAL ORDERS – ELECTRIC
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The Notice of Decision and Order stated that a final Order, including findings of fact and conclusions, would be issued at a later date. The instant Order is that final Order, and the time for filing an appeal from the decision of the Commission shall begin to run on the date of issuance of this Order.
FINDINGS OF FACT
1. The State’s electric power suppliers have made a reasonable effort to comply with the 2013 statewide swine and poultry waste set-aside requirements established by G.S. 62-133.8(e) and G.S. 62-133.8(f), but will not be able to comply.
2. Compliance with the set-aside requirements has been hindered by the fact that the technology of power production from poultry and swine waste continues to be in its early stages of development.
3. Compliance with the set-aside requirements has been hindered in some respects, and promoted in other respects, by the General Assembly, which has modified the REPS on several occasions and considered other proposals for additional modifications. Legislative and regulatory developments have made new options for compliance available to electric power suppliers; on the other hand, because of periodic proposals for change, many lenders and investors perceive the future of the REPS as uncertain.
4. Electric power suppliers and renewable power developers have worked in good faith to resolve issues previously determined to have hindered compliance, such as negotiation of power purchase agreement terms and conditions and the cost and time required to properly interconnect poultry and swine waste generation facilities with the electric grid. Despite these efforts, and a decrease in problems regarding interconnection and contractual language, developers of waste-to-energy facilities and their lenders and investors remain cautious and slow to act.
5. No party presented evidence that the aggregate 2013 poultry and swine waste set-aside requirements could be met; nor did any party oppose Joint Movants’ and Power Agencies’ motions for relief from the 2013 poultry and swine waste set-aside requirements.
6. It is in the public interest to delay required compliance by the State’s electric power suppliers with the requirements of G.S. 62-133.8(e) and (f) for one year.
7. Although a few electric power suppliers indicated their ability to meet a pro-rata allocation of the statutory requirement, it is appropriate to delay the statutory deadlines of the poultry and swine waste set-aside requirements, not only for those electric power suppliers that have been unable to comply, but for all electric power suppliers.
8. Electric power suppliers that have acquired poultry and swine waste RECs for 2013 REPS compliance should be allowed to bank such RECs for poultry and swine waste set-aside requirement compliance in future years.
9. Electric power suppliers should continue to make efforts to purchase any reasonably-priced poultry and swine waste RECs available in order to support the construction and GENERAL ORDERS – ELECTRIC
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operation of poultry and swine waste generation facilities and to fulfill requirements pursuant to this Order.
10. DEC and DEP should continue to file the verified triannual progress reports required by Ordering Paragraph No.4 of the 2012 Delay Order, and DNCP, GreenCo, Fayetteville, EnergyUnited, Halifax and the Power Agencies should also file these reports. The Power Agencies should be permitted to file their reports jointly if they so desire. The filing of these progress reports should continue until the Commission orders that they be discontinued.
11. It is appropriate for the Public Staff to arrange and facilitate two stakeholder meetings a year during 2014 and 2015.
EVIDENCE AND CONCLUSIONS FOR FINDINGS OF FACT 1-6
The evidence supporting these findings of fact appears in the testimony of DEC/DEP witness Byrd, DNCP witness Muchhala, TVA witness DeHart, Fayetteville witness Lynch, Power Agencies witness Fusco, EnergyUnited witness Natt, Halifax witness Guerry, GreenCo witness Nemeth, NCPF witness Lanier, Pork Council witness Maier, and Public Staff witness Lucas.
DEC/DEP witness Byrd testified that DEC and DEP worked diligently to comply with the 2013 poultry and swine waste set-aside requirements. Witness Byrd stated that DEP had acquired enough poultry RECs to meet its 2013 poultry waste set-aside requirement. Witness Byrd further testified, however, that DEC could not comply with its 2013 poultry waste set-aside requirement and that neither company was able to meet the 2013 swine waste set-aside requirement. Witness Byrd stated that DEC and DEP remain in active ongoing negotiations for the purchase of in-state poultry and swine RECs; they continue to explore opportunities to secure out-of-state RECs; they maintain open solicitations for additional poultry and swine resources; and they are making good-faith efforts to assist developers with difficulties in interconnecting facilities to the grid. In addition, witness Byrd stated that DEC is continuing to engage in swine waste research through its support of the Loyd Ray Farms project.
Witness Byrd stated that DEC and DEP have found that the production of electricity from poultry and swine waste is technologically challenging; it is more expensive than other more common forms of renewable energy; and that swine farms are typically located in very remote and rural areas, making interconnection costly and difficult. Further, witness Byrd stated that poultry and swine waste developers have encountered difficulties in financing their projects, in obtaining long-term supplies of animal waste fuel, and in other areas. As a result, developers have frequently delayed their commercial operation dates or abandoned their contracts with DEC and DEP. Witness Byrd stated that Commission decisions interpreting the poultry waste set-aside requirement, and the General Assembly's enactment of legislation affecting the requirement, caused DEC and DEP to frequently pause and reconsider their poultry waste compliance strategy, resulting in the loss of time. Witness Byrd testified that, in spite of all these difficulties, many of the poultry and swine waste developers who are working with DEC and DEP have made great strides. The developers have been confronted with a host of practical problems, and, as they have learned how to deal with these problems, they have brought their projects closer to commercial operation. GENERAL ORDERS – ELECTRIC
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DNCP witness Muchhala testified that DNCP has participated in the Swine Waste REC Buyers Group organized by the electric power suppliers in North Carolina, has solicited numerous REC marketers and brokers, and has conducted its own search to locate operational swine waste digesters anywhere in the United States. According to witness Muchhala, all these efforts have failed and DNCP has not been able to acquire any swine waste RECs. Witness Muchhala testified that, because DNCP is permitted by statute to rely entirely on out-of-state sources, DNCP has been able to purchase sufficient out-of-state poultry RECs to meet the requirements of the poultry waste set-aside. However, DNCP has contracted to provide REPS compliance services for the Town of Windsor, which is required to provide 75 percent of its RECs from in-state sources, and it has not found any in-state swine or poultry waste RECs; consequently, DNCP is unable to comply with either of the 2013 poultry and swine waste set-aside requirements on Windsor's behalf.
TVA witness DeHart testified that TVA made reasonable efforts to comply with the 2013 poultry and swine waste set-aside requirements. Witness DeHart stated that TVA met with other North Carolina electric power suppliers to discuss joint efforts to purchase poultry and swine waste RECs, and, TVA has solicited offers from waste-to-energy developers for RECs or generation to meet the poultry and swine waste set-aside requirements. Witness DeHart testified that, despite these efforts, TVA is unable to comply with the 2013 poultry and swine waste set-aside requirements.
Fayetteville witness Lynch testified that Fayetteville is participating in the electric power suppliers' joint request for proposals (RFP) seeking poultry waste REC sales contracts; it has issued a separate RFP for swine waste RECs, to which no responses were received; and it has diligently assessed the market for opportunities to acquire poultry and swine waste RECs, but no such opportunities have been available. Witness Lynch's testimony as to whether Fayetteville will be able to meet the 2013 poultry and swine waste set-aside requirements was confidential.
Power Agencies witness Fusco testified that there is no reason to believe the State's electric power suppliers will be able to comply with the 2013 poultry and swine waste set-aside requirements. Witness Fusco stated that the Power Agencies, along with other electric power suppliers, entered into long­term swine REC purchase agreements with four counterparties; however, three of the counterparties repeatedly failed to meet the requirements of the agreements and the agreements were subsequently terminated. The contracts with the remaining counterparty are still in effect, but the project’s commercial operation date has been significantly delayed and the projected output has been reduced. Witness Fusco further stated that the Power Agencies have continued to look, with limited success, for other suppliers that could provide swine waste RECs. They were able to purchase swine waste RECs from an out-of-state supplier; however, this supplier's registration as a renewable energy facility was subsequently revoked by the Commission and the RECs were invalidated. With respect to poultry waste, witness Fusco stated that the Power Agencies have contracted to purchase RECs from various counterparties. However, according to witness Fusco, some of these counterparties' projects have failed and the others have been delayed.
Witness Fusco testified that in his view the reasons for the Power Agencies' difficulties in obtaining poultry and swine waste RECs include: (1) the small number of participants in the market for swine waste RECs; (2) the fact that most of the swine waste market participants lack actual experience with biomass technologies; (3) the lack of a website where animal waste generation GENERAL ORDERS – ELECTRIC
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projects can easily be identified and contacted; (4) the financing difficulties encountered by developers of poultry waste generation; (5) uncertainties arising from environmental regulatory permitting issues relating to poultry waste; and (6) the continuing legislative and regulatory developments directly affecting the poultry waste set-aside. Witness Fusco noted that, although these legislative and regulatory developments have created uncertainty, they have also expanded the universe of compliance options, and the Power Agencies are seeking to make use of these options. On cross­examination, witness Fusco testified that the Power Agencies have contracted with developers managing the proposed ReVenture project, which was expected to come on line by the end of 2013. According to witness Fusco, if the Reventure project remains on schedule and is on line in 2014, the Power Agencies will be able to meet the requested modified requirements of the poultry waste set-aside for 2014.
EnergyUnited witness Natt stated that EnergyUnited has purchased out-of-state poultry and swine waste RECs, and, that it has engaged in collaborative efforts with other North Carolina electric power suppliers to obtain in-state RECs. His testimony on whether EnergyUnited will be able to comply with the 2013 poultry and swine waste set-aside requirements was confidential.
Halifax witness Guerry did not appear at the hearing. Witness Guerry’s testimony was admitted into the record pursuant to the Commission's November 5, 2013 Order. He testified that Halifax participated in the collaborative efforts of the State's electric power suppliers to obtain poultry and swine waste RECs, but, to date those efforts have been unsuccessful. Witness Guerry stated that Halifax entered into an individual agreement to purchase RECs from a swine waste-to-energy developer, however, this developer has not yet registered with the Commission as a renewable energy facility. Consequently, according to witness Guerry, Halifax is unable to meet the 2013 poultry and swine waste set-aside requirements.
GreenCo witness Nemeth testified that GreenCo has participated in the collaborative efforts of the State's electric power suppliers to obtain poultry and swine waste RECs, and in addition, GreenCo has had discussions with numerous developers seeking to produce power from animal waste. As a result of these discussions, GreenCo has purchased some swine waste RECs both in-state and out-of-state, and some out-of-state poultry waste RECs. However, according to witness Nemeth, GreenCo has not acquired enough RECs to meet the 2013 poultry and swine waste set-aside requirements.
NCPF witness Lanier testified that NCPF does not oppose the request for a delay of one year to the poultry waste set-aside requirements. Witness Lanier stated that her employer, Prestage Farms, Inc., is in the process of developing a poultry litter gasification facility in Bladen County. Witness Lanier listed the benefits of generating power from poultry litter, emphasizing that power generation will provide a beneficial use for poultry waste in the event that the current practice of land application is prohibited.
Pork Council witness Maier testified that, although the development of electric generation from swine waste has taken time, significant gains are being made. Witness Maier stated that there are six permitted projects in North Carolina, including a 1.3-MW facility being developed by Revolution Energy in the town of Magnolia, which is expected to be fully operational in November 2013. She noted that the use of swine waste for power generation provides an GENERAL ORDERS – ELECTRIC
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alternative to the disposition of waste in lagoons, which has disadvantages and resulted in a moratorium on the expansion of the hog industry in the State. Witness Maier stated that with the enactment of the swine waste set-aside requirement, the State's electric power suppliers were given the responsibility to actively support and assist in the development of energy production from swine waste. In witness Maier’s opinion, this responsibility has not been fully embraced by all electric suppliers. She asserted that the electric suppliers should make greater efforts to ensure that the language of their REC purchase contracts does not place unreasonable burdens on developers. Finally, witness Maier recommended that the provision contained in the 2012 Delay Order, requiring DEC and DEP to file triannual progress reports, be made applicable to all of the State's electric power suppliers.
Public Staff witness Lucas testified that the Joint Movants’ and the Power Agencies’ motions should be granted because the electric power suppliers are unable to comply with the 2013 poultry and swine waste set-aside requirements. Witness Lucas stated that, even though DEC and DEP have not acquired enough poultry and swine waste RECs to meet the requirements, it is clear that they have made good-faith efforts to do so. Witness Lucas further stated his belief that the other electric power suppliers have made good-faith efforts to comply, but that he cannot say so with the same degree of certainty because the other suppliers have not been required to meet the same level of transparency and additional reporting requirements that DEC and DEP were required to adhere to pursuant to the 2012 Delay Order.
Witness Lucas further testified that at the hearing prior to the 2012 Delay Order, he identified several factors that made compliance with the set­asides difficult, including: (1) uncertainty as to the environmental requirements applicable to waste-to-energy facilities; (2) uncertainty arising from the numerous statutory amendments affecting the poultry waste set-aside; (3) disagreements between electric power suppliers and developers on contract terms, particularly those relating to change of law provisions; and (4) difficulties in reaching satisfactory interconnection agreements. Witness Lucas stated that uncertainty surrounding potential changes to the REPS statute continues to exist, while the uncertainty about environmental requirements has diminished to some degree because several waste-to-energy facilities have received rulings from the Division of Air Quality of the North Carolina Department of Environment and Natural Resources that they are not subject to the restrictions applicable to solid waste incinerators. Witness Lucas further stated that most of the contractual issues relating to change of law have largely been addressed and the difficulties with interconnection agreements have for the most part been resolved.
In its determination that the effective dates of the poultry and swine waste set-asides should again be delayed, the Commission initially notes that its authority under G.S. 62-133.8(i)(2) "to modify or delay the provisions of subsections (b), (c), (d), (e), and (f) of [G.S. 62-133.8) in whole or in part" may be exercised only if the electric power suppliers requesting the modification or delay "demonstrate that [they] made a reasonable effort to meet the requirements set out" in the statute. In this case, the evidence demonstrates that the electric power suppliers made reasonable efforts to comply with their 2013 poultry and swine waste set-aside requirements. However, no supplier is able to comply with the 2013 swine waste set-aside requirement and a limited few are in a position to comply with the 2013 poultry waste set-aside requirement. Witnesses Maier and Lucas expressed some concern as to whether certain suppliers' compliance efforts might have been GENERAL ORDERS – ELECTRIC
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more vigorous and extensive, but neither contended that any supplier failed to make a reasonable effort. The Commission concludes that the limited availability of poultry waste RECs, and the near unavailability of swine waste RECs, resulted in a scenario in which compliance could not be achieved. The primary cause of these limitations is the immature and undeveloped state of the technology of electric power generation from poultry and swine waste. Many states have adopted renewable energy portfolio standards, however, North Carolina is the only state with set­aside requirements for energy generated from swine or poultry waste. Witnesses Byrd, Fusco and Nemeth testified that almost every developer that agreed to provide power from poultry or swine waste had to postpone startup dates or abandon the projects entirely.
The evidence shows little disagreement regarding other causes of the electric power suppliers' difficulty with compliance in 2013. Witnesses Byrd, Fusco and Lucas all noted that new legislative developments affecting the poultry waste set-aside have resulted in uncertainty and delays, although they have also provided suppliers with new ways of complying with the set-aside. Witness Lucas further testified that there have been disputes about the terms and conditions of REC purchase agreements and disagreements and misunderstandings as to the interconnection of facilities. The testimony of these witnesses was not contradicted by any party.
The Commission notes that despite setbacks, which are inevitable with the development of a new technology, several of the State's waste-to-energy developers are making significant strides. Witness Byrd testified that many developers have made significant progress and are close to having their facilities on line. Additionally, witness Byrd stated that DEP is in a position to comply with its 2013 poultry waste set-aside requirement. Witness Fusco stated that the ReVenture project was expected to begin producing poultry waste RECs by the end of 2013; witness Nemeth indicated that GreenCo is purchasing a small amount of in-state swine waste RECs; and witness Lanier testified that the Revolution Energy swine waste plant in Magnolia is scheduled to come on line in the near future.
EVIDENCE AND CONCLUSIONS FOR FINDINGS OF FACT 7-9
The evidence supporting these findings of fact appear in the testimony of DNCP witness Muchhala and Power Agencies witness Fusco.
DNCP witness Muchhala testified that, despite the fact that DNCP is in compliance with the 2013 poultry waste set-aside requirements and the Town of Windsor has acquired some poultry waste RECs, their compliance schedule should be delayed uniformly with the other electric power suppliers. Witness Muchhala further testified that DNCP should be allowed to bank its already acquired RECs for future use. Witness Muchhala contended that this approach maintains fairness among the electric power suppliers and is appropriate because the poultry waste set-aside requirement is a joint annual compliance requirement to be achieved by all the electric power suppliers.
Power Agencies witness Fusco testified that, if any electric power supplier is granted a delay to the 2013 poultry and swine waste set-aside requirements, the same relief should be granted to those electric power suppliers capable of whole or partial compliance. Witness Fusco stated that if suppliers that incurred costs in good faith to acquire poultry and swine waste RECs are required GENERAL ORDERS – ELECTRIC
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to retire those RECs in 2013, while those suppliers who acquired no RECs are excused from compliance, the practical effect is that the suppliers who purchased RECs will be penalized for good faith efforts to comply with the requirements.
No party offered testimony in opposition to the contentions of witnesses Muchhala and Fusco.
In the 2012 Delay Order the Commission modified the 2012 poultry and swine waste set-aside requirements uniformly for all parties, including those that were able to fully or partially comply with the set-asides, as well as those that had not acquired any swine or poultry waste RECs. Further, the Commission allowed parties that had acquired RECs to bank them for compliance in future years. The Commission directed all electric power suppliers to continue to make efforts to purchase any reasonably priced poultry and swine waste RECs that were available. These procedures are fair to all parties and are not opposed by any party to this proceeding. Further, the nature of the poultry and swine waste set-aside requirements, as aggregate requirements, would render compliance planning exceedingly complex were different electric power suppliers held to different compliance schedules. Consequently, the Commission will adopt the same procedures for use in this proceeding. However, the Commission notes that, as poultry and swine waste RECs become more readily available and more electric power suppliers are able to comply with the requirements, the Commission reserves the right to revisit the uniform application of compliance delays in potential future proceedings if the Commission finds it necessary to do so.
EVIDENCE AND CONCLUSIONS FOR FINDINGS OF FACT 10-11
The evidence supporting these findings of fact appear in the testimony of Public Staff witness Lucas, Pork Council witness Maier, Fayetteville witness Lynch, and Power Agencies witness Fusco.
Public Staff witness Lucas testified that the triannual progress reports, currently filed by DEC and DEP pursuant to Ordering Paragraph No. 4 of the Commission's 2012 Delay Order, should also be filed by DNCP, TVA, Fayetteville, the Power Agencies, and GreenCo. He stated that this requirement would provide greater transparency as to these suppliers' compliance efforts. On cross-examination and redirect, witness Lucas testified that the triannual progress reports should not only include the names of developers with whom a supplier has had discussions and the reasons why these discussions did or did not lead to a REC purchase contract, but should also include some degree of detail as to each developer's proposal. In witness Lucas’ opinion, the preparation of an electric power supplier's initial progress report will require some effort. However, subsequent reports should be relatively easy to prepare since the electric power supplier can use its first report as a template and insert new information or delete outdated material as needed.
Pork Council witness Maier testified that the triannual reports should be filed by all electric power suppliers. Witness Maier stated that these reports include useful information about the suppliers' compliance efforts, provide additional incentive for the suppliers to focus on compliance with the poultry and swine waste set-asides, and give interested parties an opportunity to intercede if necessary. Further, witness Maier suggested that periodic stakeholder meetings would help reduce uncertainty by displaying a commitment on the part of developers and the electric power suppliers. GENERAL ORDERS – ELECTRIC
16
Power Agencies witness Fusco stated that he did not believe the electric power suppliers, other than DEC and DEP, should be required to file triannual reports. Witness Fusco stated that DEC and DEP agreed to file these reports in a settlement agreement in the 2012 proceeding. However, the other electric power suppliers were not parties to the settlement agreement and never agreed to file the reports. Witness Fusco stated that electric power suppliers already file annual compliance plans and compliance reports, and additional reporting requirements would be overly burdensome and would not produce any additional RECs. Witness Fusco stated that, in his opinion, the only obligation of the electric power suppliers under G.S. 62-133.8 is to acquire the number of RECs specified in the statute; they are not required to actively support and assist in the development of renewable energy.
On cross-examination, witness Fusco stated that the labor costs required to compile a triannual report and have it reviewed by the Power Agencies' legal staff would be significant, amounting to about $1,000. He agreed that the triannual reports would help keep the Commission abreast of the electric power suppliers' compliance efforts and would provide the electric power suppliers with an opportunity to bring their concerns forward to the Commission. Witness Fusco stated that the Power Agencies' annual compliance reports and compliance plans are filed in September and their off-ramp motion this year was also filed in September. Witness Fusco acknowledged that for the rest of the year, if they are not required to file triannual reports, the Power Agencies will not make any information available about their compliance activities.
Fayetteville witness Lynch testified that Fayetteville should not be burdened with preparing triannual reports because it is a small supplier and its efforts to comply with the poultry and swine waste set-aside requirements are limited to participating in purchasing collaboratives. On cross-examination, witness Lynch agreed that swine and poultry production are important industries to the State's economy that produce an undesirable waste product, and that in enacting G.S. 62-133.8(e) and (f) the General Assembly hoped to create a way of disposing of this waste product while producing useful electric power. He further acknowledged that to achieve this goal the electric power suppliers and the waste-to-energy developers must cooperate in good faith, and, in particular, they must communicate with each other.
Whether to require triannual reports from electric power suppliers other than DEC and DEP is the only contested issue before the Commission in this proceeding. In this matter the Commission agrees with the Public Staff and the Pork Council. The triannual reports filed this year by DEC and DEP have been valuable to the Commission. The filing of similar reports by DNCP, GreenCo, Fayetteville, EnergyUnited, Halifax and the Power Agencies should likewise provide helpful information on their compliance activities; should help keep the Commission informed on whether progress is continuing toward making the generation of power from poultry and swine waste a practical reality; and should assist the Commission in ruling on similar future motions, if necessary. Further, the filing of triannual reports will provide regular notice to the Commission of electric power suppliers’ compliance, or lack thereof, with the poultry and swine waste set-aside requirements, rather than the Commission relying upon the electric power suppliers to file motions for relief, which have occurred late in the calendar year.
As witnesses Fusco and Lynch pointed out, the electric power suppliers will incur some costs in preparing triannual reports; however, the Commission agrees with witness Lucas that a GENERAL ORDERS – ELECTRIC
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supplier's second and subsequent reports will be less time-consuming and expensive than its first one. The Commission does not find this to be an unreasonable expense for larger electric power suppliers. The Commission has taken the cost of the reports into account, however, in choosing to exempt the smallest suppliers from the reporting obligation.
Accordingly, the Commission concludes that DNCP, GreenCo, Fayetteville, EnergyUnited, Halifax and the Power Agencies, as well as DEC and DEP, should be required to file the verified triannual Progress Reports required by Ordering Paragraph No. 4 of the Commission's 2012 Delay Order. Further, the Public Staff is requested to arrange and facilitate two stakeholder meetings a year during 2014 and 2015 that shall be attended by the electric power suppliers that are subject to the triannual reporting requirement. The purpose of the stakeholder meetings is to encourage communication between electric power suppliers and developers and to discuss potential obstacles to achieving compliance with the poultry and swine waste set-aside requirements and options for addressing them.
IT IS, THEREFORE, ORDERED as follows:
1. That the 2013 requirement of G.S. 62-133.8(e), as established in the Commission’s 2012 Delay Order, is delayed for one year. The electric power suppliers, in the aggregate, shall comply with the requirements of G.S. 62-133.8(e) according to the following schedule:
Calendar Year Requirement for Swine Waste Resources
2014-2015 0.07%
2016-2018 0.14%
2019 and thereafter 0.20%
2. That the 2013 requirement of G.S. 62-133.8(f), as established in the Commission’s 2012 Delay Order, is delayed for one year. The electric power suppliers, in the aggregate, shall comply with the requirements of G.S. 62-133.8(f) according to the following schedule:
Calendar Year Requirement for Poultry Waste Resources
2014 170,000 megawatt-hours
2015 700,000 megawatt-hours
2016 and thereafter 900,000 megawatt-hours
3. That the Public Staff is requested to arrange and facilitate two stakeholder meetings a year during 2014 and 2015. The electric power suppliers that are subject to the triannual filing requirement (as discussed herein) shall attend. Developers and other stakeholders are encouraged to participate and discuss potential obstacles to achieving the swine and poultry waste requirements and options for addressing them.
4. That the triannual filing requirement first required by the Commission’s 2012 Delay Order and that now applies to DEP and DEC shall apply to DNCP, GreenCo, Fayetteville, EnergyUnited, Halifax, NCEMPA and NCMPA1. The reports to be filed shall be due to the Commission on each May 1, September 1, and January 1, until the Commission finds that they are GENERAL ORDERS – ELECTRIC
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no longer necessary. The filing requirements shall be as specified in ordering paragraph 4 of the Commission’s 2012 Delay Order.
ISSUED BY ORDER OF THE COMMISSION
This the __26th ___ day of March, 2014.
NORTH CAROLINA UTILITIES COMMISSION
Paige J. Morris, Deputy Clerk
DOCKET NO. E-100, SUB 113
BEFORE THE NORTH CAROLINA UTILITIES COMMISSION
In the Matter of
Rulemaking Proceeding to Implement Session Law 2007-397
)
)
)
ORDER MODIFYING THE SWINE
WASTE SET-ASIDE REQUIREMENT
AND PROVIDING OTHER RELIEF
BY THE COMMISSION: On August 28, 2014, a joint motion to modify and delay the 2014 requirements of G.S. 62-133.8(e) was filed by Duke Energy Carolinas, LLC (DEC);1 Duke Energy Progress, Inc. (DEP);2 Virginia Electric and Power Company, d/b/a Dominion North Carolina Power (Dominion);3 GreenCo Solutions, Inc. (GreenCo); Public Works Commission of the City of Fayetteville (Fayetteville); EnergyUnited Electric Membership Corporation (EnergyUnited); Halifax Electric Membership Corporation (Halifax); the Tennessee Valley Authority (TVA);4 North Carolina Eastern Municipal Power Agency (NCEMPA);5 and North Carolina Municipal Power Agency Number 1 (NCMPA1)6 (hereinafter referred to collectively as the Joint Movants). The Joint Movants requested that the Commission relieve them of compliance with G.S. 62.133.8(e) (Compliance With [North Carolina’s Renewable Energy and Energy
1 DEC asserted that it is also acting in its capacity as REPS compliance aggregator for Blue Ridge Electric Membership Corporation (EMC), Rutherford EMC, the City of Dallas, Forest City, City of Concord, the Town of Highlands and the City of Kings Mountain.
2 DEP asserted that it is also acting in its capacity as REPS compliance aggregator for the Towns of Sharpsburg, Lucama, Black Creek, and Stantonsburg, and the City of Waynesville.
3 Dominion asserted that it is also acting in its capacity as REPS compliance aggregator for the Town of Windsor.
4 TVA asserted that it is acting in its capacity as REPS compliance aggregator for Blue Ridge Mountain EMC, Mountain Electric Cooperative, Tri-State EMC and Murphy Electric Power Board.
5 NCEMPA asserted that it is acting in its capacity as REPS compliance aggregator for its 32 member municipalities which are electric power suppliers.
6 NCMPA1 asserted that it is acting in its capacity as REPS compliance aggregator for its 19 member municipalities which are electric power suppliers. GENERAL ORDERS – ELECTRIC
19
Efficiency Portfolio Standard (REPS)] Requirement Through Use of Swine Waste Resources) by delaying their need to comply with this requirement by one year until 2015. The joint motion further requested that the Commission allow the Joint Movants to bank any swine renewable energy certificates (RECs) previously or subsequently acquired for use in future compliance years, and allow the Joint Movants to replace compliance with the swine waste requirements in 2014 with other compliance measures pursuant to G.S. 62-133.8(b), (c), and (d). The Joint Movants requested that the Commission consider and approve their joint motion without an evidentiary hearing.
The Joint Movants stated that they have individually and collectively made reasonable efforts to comply with the REPS swine waste resource provisions, and that the relief sought is in the public interest. The Joint Movants identified a number of actions taken to display their efforts to comply. Specifically, these actions, according to the Joint Movants, included actively engaging swine waste-to-energy developers, issuing requests for proposals, evaluating bids received, negotiating and executing long-term REC purchase agreements for these resources, processing interconnection requests from these generators, actively monitoring executed agreements, and, in some cases, further modifying REC purchase agreements to provide developers reasonable opportunity for successful project execution.
On September 17, 2014, the Commission issued an Order Requesting Comments in the above captioned docket, requesting that interested parties file comments on the Joint Movants’ request on or before Friday, October 10, 2014. On October 9, 2014, Environmental Defense Fund (EDF) submitted comments. On October 10, 2014, the North Carolina Pork Council (NCPC) and the Public Staff submitted comments. No party submitted comments in opposition to the Joint Movants’ request to delay the swine waste set-aside requirement.
EDF, in its comments, did not challenge the Joint Movant’s request to delay the swine waste set-aside. EDF noted the increasing number of technologies by which swine waste may be converted to electricity, in particular, biogas. EDF stated that it does not support routine annual extensions and that they should not become the norm. EDF stated that the utilities should become more involved in the development of swine waste resources in future years to display that they have made a reasonable effort to comply with the swine waste set-aside requirement. EDF requested that the Commission (1) set forth enumerated milestones at which the utilities must publicly report to ensure that they remain on course for compliance and (2) require DEC and DEP to develop a stakeholder process to “scale” the requirement and establish subsequent deadlines. Finally, EDF attached to its comments an analysis completed by Duke University of options for collecting and using biogas generated from swine waste.
NCPC, in its comments, noted that this is the third straight year that the electric suppliers have asked to modify or delay compliance with the swine waste set-aside requirement. NCPC stated that it did not oppose the Joint Movants’ request, however, NCPC noted that not much progress towards compliance has been made and added recommendations which it felt could help move the electric suppliers closer to achieving compliance. Specifically, NCPC requested (1) that the tri-annual reporting requirements be continued; and (2) that the Public Staff evaluate the prices offered to assess the reasonableness of efforts to comply and conduct an analysis of the relevant market, including price. NCPC also noted the Duke University study attached to EDF’s comments GENERAL ORDERS – ELECTRIC
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as evidence that swine waste development, contrary to the claims of several electric power suppliers, can be done economically in North Carolina.
The Public Staff, in its comments, stated that it had reviewed the tri-annual reports as well as information obtained at stakeholder meetings. As a result of this review, the Public Staff stated its belief that the electric power suppliers, in general, are making a good faith effort to comply with the swine waste set-aside requirement. The Public Staff identified several problem areas affecting compliance including: interconnection; reluctance of farmers to sign long-term fuel supply agreements; the sunset of the federal production tax credit; uncertainty in contract fulfillment based on past lack of performance; air quality permit delays; issues in the anaerobic digestion process, including waste disposal; and the uncertainty caused by the previous delays to the swine waste set-aside requirement. The Public Staff noted potential solutions to these problems discussed at stakeholder meetings including: electric power suppliers and the public bearing more risk in swine waste facility construction and operation, and the allowance of back-up fuels to generate electricity for a period of time in which swine waste fuels may become unavailable. The Public Staff recommended that the Commission grant the Joint Movants’ request to delay the swine waste set-aside requirement until 2015. The Public Staff further recommended that the Commission allow electric power suppliers to bank any swine waste RECs previously or subsequently acquired for use in future compliance years. Finally, the Public Staff recommended that the Commission proceed in this matter without a hearing.
G.S. 62-133.8(i)(2) states that the Commission, in developing rules, shall:
Include a procedure to modify or delay the provisions of subsections (b), (c), (d), (e), and (f) of this section in whole or in part if the Commission determines that it is in the public interest to do so. The procedure adopted pursuant to this subdivision shall include a requirement that the electric power supplier demonstrate that it made a reasonable effort to meet the requirements set out in this section.
Commission Rule R8-67(c)(5) states:
In any year, an electric power supplier or other interested party may petition the Commission to modify or delay the provisions of G.S. 62-133.8(b), (c), (d), (e) and (f), in whole or in part. The Commission may grant such petition upon a finding that it is in the public interest to do so. If an electric power supplier is the petitioner, it shall demonstrate that it has made a reasonable effort to meet the requirements of such provisions.
The Commission has previously exercised this authority and delayed compliance with the swine waste set-aside requirement on two occasions, first as delineated in its November 29, 2012 Order Modifying the Poultry and Swine Waste Set-Aside Requirements and Granting Other Relief (2012 Delay Order), and a second time as delineated in its March 26, 2014 Final Order Modifying the Poultry and Swine Waste Set-Aside Requirements and Providing Other Relief (2013 Delay Order), both issued in Docket No. E-100, Sub 113.
Based on the tri-annual reports submitted by the electric power suppliers in Docket No. E-100, Sub 113A, the Joint Movants’ motion, the intervenors’ comments, and the entire record GENERAL ORDERS – ELECTRIC
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herein, the Commission finds that the State’s electric power suppliers have made a reasonable effort to comply with the 2014 statewide swine waste set-aside requirement established by G.S. 62-133.8(e), but will not be able to comply. Compliance with the set-aside requirements has been hindered by the fact that the technology of power production from swine waste continues to be in its early stages of development. Additional factors contributing to the inability to comply include interconnection issues, reluctance of farmers to sign long-term fuel supply agreements, uncertainty in contract fulfillment based on past lack of performance, and the uncertainty caused by the previous delays to the swine waste set-aside requirement, among others. No party presented evidence that the aggregate 2014 swine waste set-aside requirement could be met; nor did any party oppose the Joint Movants’ request. The Commission further finds that it is in the public interest to delay required compliance by the State’s electric power suppliers with the requirements of G.S. 62-133.8(e) for one year. Electric power suppliers that have acquired swine waste RECs for 2014 REPS compliance should be allowed to bank such RECs for swine waste set-aside requirement compliance in future years. Electric power suppliers should continue to make efforts to comply with the swine waste set-aside requirement as modified by this Order. In addition, all electric power suppliers subject to the tri-annual reporting requirements shall continue to file reports until the Commission orders that they be discontinued. Finally, it remains appropriate for the Public Staff to arrange and facilitate two stakeholder meetings during 2015.
The Commission does not find that good cause exists at the present time to grant EDF’s request that the Commission set forth enumerated milestones at which the utilities must publicly report and that the Commission require DEC and DEP to develop a stakeholder process to “scale” the swine waste set-aside requirement. The Commission, in the 2012 Delay Order, as modified by the 2013 Delay Order, has established a tri-annual reporting requirement to track compliance efforts relative to both the swine and poultry waste set-aside requirements throughout the year. The purpose of the reports is to provide the Commission with an accurate portrayal of compliance efforts throughout the year and the reports have proven useful in this capacity. The Commission finds that the tri-annual reporting requirement has proven to be an adequate method to track compliance efforts over a given year, and, thus, EDF’s request would result in unnecessary duplicative requirements.
IT IS, THEREFORE, ORDERED as follows:
1. That the 2014 requirement of G.S. 62-133.8(e), as established in the Commission’s 2013 Delay Order, is delayed for one year. The electric power suppliers, in the aggregate, shall comply with the requirements of G.S. 62-133.8(e) according to the following schedule:
Calendar Year Requirement for Swine Waste Resources
2015-2016 0.07%
2017-2019 0.14%
2020 and thereafter 0.20%
Electric power suppliers shall be allowed to bank any swine waste RECs previously or subsequently acquired for use in future compliance years and to replace compliance with the swine waste requirements in 2014 with other compliance measures pursuant to G.S. 62-133.8(b), (c), and (d). GENERAL ORDERS – ELECTRIC
22
2. That the Public Staff is requested to arrange and facilitate two stakeholder meetings during 2015. The electric power suppliers that are subject to the triannual filing requirement (as discussed below) shall attend. Developers and other stakeholders are encouraged to participate and discuss potential obstacles to achieving the swine and poultry waste requirements and options for addressing them.
3. That the tri-annual filing requirement first required by the Commission’s 2012 Delay Order and that now, pursuant to the 2013 Delay Order, applies to DEP, DEC, Dominion, GreenCo, Fayetteville, EnergyUnited, Halifax, NCEMPA and NCMPA1 shall be due to the Commission on each May 1, September 1, and January 1, until the Commission finds that they are no longer necessary. The filing requirements shall be as specified in ordering paragraph 4 of the Commission’s 2012 Delay Order.
ISSUED BY ORDER OF THE COMMISSION.
This the __13th day of November, 2014.
NORTH CAROLINA UTILITIES COMMISSION
Gail L. Mount, Chief Clerk
DOCKET NO. E-100, SUB 134
BEFORE THE NORTH CAROLINA UTILITIES COMMISSION
In the Matter of
Filing Requirements for New Electric Generators
)
)
)
)
ORDER AMENDING RULES AND REQUESTING COMMENTS ON ADDITIONAL PROPOSED RULE CHANGES
BY THE COMMISSION: On September 8, 2014, the Commission issued an Order Requesting Comments on Proposed Rule Changes in which it requested comments on proposed amendments to Commission Rules R8-61, R8-63, and R8-64. The proposed rule changes were intended to “facilitate more efficient review by government agencies and the general public of the potential environmental, cost, and fuel security impacts of proposed new electric generation facilities.”
Subsequently, the Commission received comments from Carolinas Public Gas Association, Greenville Utilities Commission, City of Rocky Mount, City of Wilson, City of Monroe and City of Shelby (Public Gas Systems); Dominion North Carolina Power (Dominion); North Carolina Sustainable Energy Association (NCSEA); and the Public Staff. Duke Energy Carolinas, LLC and Duke Energy Progress, Inc., jointly filed a letter stating that they had reviewed the proposed changes and had no comments.
GENERAL ORDERS – ELECTRIC
23
SUMMARY OF COMMENTS
Public Gas Systems
The Public Gas Systems assert that new gas-fueled power plants should be required to demonstrate that they have secured long-term firm gas supply and pipeline capacity prior to beginning construction. They note that North Carolina has experienced an increased demand for gas as a fuel for electric generation, and that “as this trend continues and new natural gas-fueled power plants are proposed, their impact on the natural gas market should be taken into account.” They state:
During normal operating and weather conditions, there is currently sufficient natural gas supply and pipeline capacity for electric generation facilities to operate without adverse impact to existing natural gas consuming customers. However, as reliance on natural gas for electric generation grows, the current market framework and infrastructure cannot ensure reliability, especially during extreme weather conditions.
The Public Gas Systems state further that they have seen many manufacturing customers that used natural gas year round close their operations.
This shift in the economy has changed their [the Public Gas Systems] load profile to be more sensitive to temperature changes, as a greater percentage of their customers now use natural gas for space and water heating rather than for manufacturing. In addition … [t]hey have less pipe in which line pack can be stored or used to accommodate demand fluctuations. They serve less geographic territory over which temperatures may differ to allow system gas to be re-distributed. And they have few interruptible customers that can be curtailed to manage demand swings. All of these factors have made gas supply management increasingly difficult for the Public Gas Systems.
Upon information and belief, many electric generation facilities do not purchase year-round firm pipeline capacity or enter into non-interruptible contracts so as to avoid the required demand charges and instead arrange by contract for delivery of natural gas “just-in-time” as needed – often at peak-energy-usage periods. This new entrant in the wholesale gas market has changed the supply and demand dynamics, with adverse impacts on the traditional market participants such as the Public Gas Systems.
An example of an adverse impact to the market occurred during the January and February 2014 “polar vortex” periods. During those times, temperatures plunged far below normal for several days, and the Public Gas Systems needed to buy additional natural gas and capacity on the spot market to meet their customers’ demand. During January 2014, Transco Zone 5 (North Carolina) gas prices averaged over $24 per dekatherm (Dt) per day, with seven days exceeding $40 per Dt, and a one-day spike of $118. This compares with the previous January in 2012 GENERAL ORDERS – ELECTRIC
24
[sic] when the average daily price for the month was $4.42 per Dt. At least one Public Gas System had to purchase natural gas on the spot market in Zone 6 NNY at $123 per dekatherm.
. . .
This rulemaking docket for new electric generation facilities provide[s] the Commission with an opportunity to send a clear signal that future electric generation facilities will need to secure firm pipeline capacity and to participate in efforts to improve pipeline infrastructure and enhance long-term reliability.
The Public Gas Systems express support for rule changes proposed by the Commission that would require electric power supplier applicants for natural gas-fired facilities with a capacity of 300 megawatts (MW) or more to provide “a map showing the proximity of the facility to existing natural gas facilities; a description of dedicated gas facilities to be constructed to serve the facility and any filed agreements, service contracts, or tariffs for interstate pipeline capacity.” (Currently, this provision only applies to merchant facilities, not public utilities.) The Public Gas Systems also supported the proposed change that would require applications for certificates of public convenience and necessity (CPCN) qualifying co-generators and small power producers to include “the nature of the generating facility, including the type and source of its power or fuel.” The Public Gas Systems stated that this additional information will help reveal the extent that new generation facilities will impact the wholesale natural gas market as a whole and the collateral effects they may have on other market participants.
Similarly, the Public Gas Systems state that they support the proposed new requirement for new gas-fired generators owned by public utilities to file “a statement of how the facility would contribute to resource and fuel diversity, whether the facility would have dual-fuel capability, and how much fuel would be stored at the site.” They also supported the proposed requirement that applicants demonstrate arrangements made or planned to assure a dependable fuel supply.
Dominion
Dominion expresses concern that applicants would be required to provide detailed financial information 120 days prior to a CPCN filing. This is an existing requirement for facilities that are 300 MW or larger. The Commission’s proposed rule change would: (1) require all CPCN applications that are filed by public utilities to include the financial information, not just those for plants of 300 MW or more; and (2) allow the utility to file the information with the CPCN, rather than 120 days in advance (as is currently required pursuant to Rule R8-61 for plants 300 MW and larger).
Regarding Rule R8-63, which governs filing requirements for merchant plants, Dominion states that the current requirement in Section (e)(3) should be changed. This provision requires an applicant to pursue a certificate renewal if the applicant does not begin construction within two years after the date the Commission grants the certificate. Dominion stated that “the timeframe of two years for renewal of a CPCN may be better at three years or greater. The Company’s concern GENERAL ORDERS – ELECTRIC
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is that some permits take so long to obtain that if the certificate expires there could be additional delays of another 2 years to “‘re-obtain’” various permits.”
NCSEA
NCSEA makes several recommendations. The first relates to the existing filing requirements for small power producer CPCN applications and renewable energy registrations. NCSEA notes that both Rule R8-64(b)(2) and R8-66(b)(1)(iii) require the applicant to provide the facility’s “projected dependable capacity.” NCSEA states that it appears that renewable energy project developers are construing the phrase differently, depending on whether they are filing for a CPCN or registering as a renewable energy facility. NCSEA stated that when owners are registering renewable energy facilities that have intermittent capacity (wind and solar), they frequently interpret the phrase “projected dependable capacity” to mean “projected dispatchable capacity.” For non-dispatchable projects, owners are frequently reporting zero “projected dependable capacity.” In contrast, developers of wind and solar projects that apply for a CPCN frequently interpret “projected dependable capacity” to mean “maximum nameplate capacity,” according to NCSEA. Subsequently, applicants are providing the additional, more detailed information required under Rule R8-64 when a project’s nameplate capacity is more than 5 MW.
NCSEA, therefore, recommends that the Commission revise Rule R8-64(b)(2) so that it conforms to current practice by replacing the phrase “projected dependable capacity” with the phrase “maximum nameplate capacity.”
NCSEA notes that the Commission’s current CPCN rules for merchant plants allow developers to designate some information as confidential. Rule R8-63(c) states:
Confidential Information. If an applicant considers certain of the required information to be confidential and entitled to protection from public disclosure, it may designate said information as confidential and file it under seal. Documents marked as confidential will be treated pursuant to applicable Commission rules, procedures, and orders dealing with filings made under seal and with nondisclosure agreements.
NCSEA recommends that the Commission add this same provision to Rule R8-64, the rule addressing CPCN applications for small power producers and co-generators.
NCSEA recommends a revision to the notice provision of Rule R8-64(c)(1), which currently states:
The Commission will issue an order requiring the applicant to publish notice of the application once a week for four successive weeks in a daily newspaper of general circulation in the county where the generating facility is proposed to be constructed …
NCSEA notes that in many parts of the State, local daily newspapers of general circulation no longer exist, and that the General Assembly revised G.S. 62-82(a) during its 2013 session (Session Law 2013-410, Section 29) to remove the word “daily” from a parallel statutory GENERAL ORDERS – ELECTRIC
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requirement. NCSEA recommends that the Commission similarly remove the word “daily” from R8-64(c)(1).
NCSEA recommends that the Commission no longer require small power producer and co-generation facility developers to provide 12 copies of their applications, if the developer makes its filing electronically. Finally, NCSEA states that the current Rule R8-64 requires CPCN applications for small power producers and co-generators to include “a detailed explanation of the anticipated kilowatt and kilowatt-hour outputs, on-peak and off-peak, for each month of the year.” NCSEA recommends that the Commission’s rules be amended such that applicants would be required to state “the specific on-peak and off-peak hours underlying the applicant’s quantification of anticipated kilowatt and kilowatt-hour outputs.”
Public Staff
The Public Staff provides a “redline” of many minor but useful changes. In addition, the Public Staff proposes several substantive changes. First, the Public Staff suggests the following amendment to Rule R8-64 (CPCNs for small power producers and co-generators):
In addition to the information required above, an applicant who desires to enter into a contract for a term of 5 years or more for the sale of electricity and who will have a projected dependable capacity of 5 megawatts or more available for such sale or construct a solar photovoltaic facility with an alternating current (AC) capacity of 25 megawatts or greater shall include in the application the following three additional exhibits:1
NCSEA also references this rule provision via a footnote:
If the Commission is interested in making substantive changes, it could consider increasing the threshold to 10 or 20 megawatts. Some of NCSEA’s members have
1 These three exhibits require an applicant to file:
1. A statement detailing the experience and expertise of the persons who will develop, design, construct and operate the project to the extent such persons are known at the time of the application.
2. Information specifically identifying the extent to which any regulated utility will be involved in the actual operation of the project.
3. A statement obtained by the applicant from the electric utility to which the applicant plans to sell the electricity to be generated setting forth an assessment of the impact of such purchased power on the utility’s capacity, reserves, generation mix, capacity expansion plan, and avoided costs.
4. The most current available balance sheet of the applicant.
5. The most current available income statement of the applicant.
6. An economic feasibility study of the project.
7. A statement of the actual financing arrangements entered into in connection with the project to the extent known at the time of the application.
8. A detailed explanation of the anticipated kilowatt and kilowatt-hour outputs, on-peak and off-peak, for each month of the year.
9. A detailed explanation of all energy inputs and outputs, of whatever form, for the project, including the amount of energy and the form of energy to be sold to each purchaser.
10. A detailed explanation of arrangements for fuel supply, including the length of time covered by the arrangements, to the extent known at the time of the application. GENERAL ORDERS – ELECTRIC
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suggested that this might be an appropriate revision given the evolving North Carolina marketplace. Such a change would streamline more filings and, in turn, reduce the time spent by the clerk’s office reviewing filings to ensure all exhibits are attached and rule-compliant.
Further, the Public Staff recommends that Rule R8-64 be amended so that each electric utility would be required to “provide on its website a mailing address to which the application and notice should be mailed.” The Public Staff also recommends that Rule R8-64 be amended so that:
If the applicant does not file the affidavit of publication and certificate of service within six months of the Commission’s publication order, the Commission will automatically dismiss the application.
The Public Staff does not provide an explanation for this proposed change. The Public Staff recommended amending Rules R8-63 and 64 to clarify that applicants should provide the size of their proposed facilities in terms of megawatts of “alternating current.” The Public Staff also proposed to delete the annual progress reports required in Rule R8-64, “consistent with the comments filed by the Public Staff on July 29, 2014 in Docket No. E-100, Sub 113 that interconnection and construction progress reports should be filed by the utilities….”
The Public Staff recommends that, because CPCN applications for small power producers and co-generators under Rule R8-64 are not required to be filed by a member of the Bar of the State of North Carolina, the Commission should adopt an application form for this rule, as well as for Rule R8-65 (Report by Persons Constructing Electric Generating Facilities Exempt from Certification Requirements) and R8-66 (Registration of Renewable Energy Facilities; Annual Filing Requirements). In addition, the Public Staff recommends that the Commission merge the requirements of Rules R8-64 and 65 so that a facility owner “can seek the benefits of R8-66 and 64 or 65 with one application.”
DISCUSSION AND CONCLUSIONS
The Commission has carefully considered the Public Gas Systems’ recommendation that all new gas-fueled electric generation facilities be required to secure long-term firm gas supplies and pipeline capacity. While at first blush this recommendation appears to have merit, the Commission notes that the Public Gas Systems appear to be criticizing electric generators for engaging in gas purchasing practices that they themselves also follow. Specifically, purchasing gas and pipeline capacity on the spot market when “absolutely necessary” because of extreme weather events that were not contemplated and which do not occur often. Second, some gas-fired electric generators are peaking plants, and might only be needed to serve customers during the summer when air conditioning use is high. At such times, gas capacity tends to be available, even on the spot market. The fuel procurement practices for an electric generating plant should mirror the role that the plant will play in the public utility’s fleet of plants. It might not be necessary for every natural gas-fired plant to have 20-year firm supply and pipeline capacity commitments. The rule changes that the Commission proposed in its September 8, 2014 Order include new requirements for electric public utilities to include in their CPCN applications:
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A statement of how the facility would contribute to resource and fuel diversity, whether the facility would have dual-fuel capability, and how much fuel would be stored at the site.
They would also be subject to this new requirement:
In the case of natural gas-fired facilities, a map showing the proximity of the facility to existing natural gas facilities; a description of dedicated gas facilities to be constructed to serve the facility; and any filed agreements, service contracts, or tariffs for interstate pipeline capacity …
The Commission concludes that these new provisions should be adequate to ensure that fuel supply issues are thoroughly discussed during the CPCN process for new electric generators. In addition, if the Commission were to adopt the Public Gas Systems’ recommendation, there is a real possibility that electric utilities and their customers would be paying more and the Public Gas Systems and their customers would be paying less for pipeline capacity than is fair. It is the responsibility of the Public Gas Systems to ensure that there is adequate pipeline capacity available to serve their firm, heat-sensitive customers, even on the coldest of days. The Public Gas Systems should not rely on the Commission to order electric utilities to contract for excess gas pipeline capacity, which would result in additional costs being passed onto utility electric ratepayers to the benefit of Public Gas Systems’ customers. Therefore, the Commission will decline to adopt the Public Gas Systems’ recommendation that all new gas-fueled electric generation facilities be required to secure long-term firm gas supplies and pipeline capacity.
Regarding Dominion’s suggestion that the deadline for beginning construction pursuant to a CPCN be extended from the current two years to three years for merchant developers, the Commission finds this suggestion to be reasonable given the complexities of securing all of the permits needed for a generating facility, and will adopt Dominion’s recommendation. As to Dominion’s concerns regarding an applicant’s obligation to file financial information, the changes being approved today would actually ease that requirement somewhat. Today, applicants seeking approval for a plant of 300 MW or more must file financial information 120 days in advance of their CPCN application. Under the changes approved today, that information would become part of the CPCN application itself.
The Commission carefully considered the recommendations made by NCSEA. NCSEA suggests amending Rule R8-64(b)(2) so that applicants would be reporting their “maximum nameplate capacity.” The Commission finds that it would be instructive and helpful to have a proposed facility’s capacity reported both in terms of maximum nameplate capacity and in terms of projected dependable capacity, as the rule requires today. The Commission will, therefore, add that requirement and clarify that applicants should provide the information as megawatts alternating current, as discussed below.
The Commission agrees with NCSEA’s recommendation that would allow small power producers and co-generators to designate some information as confidential, as well as its suggestion to remove the requirement to provide notice via a daily newspaper. The Commission will adopt those proposed changes. NCSEA’s recommendation that these applicants also be GENERAL ORDERS – ELECTRIC
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relieved of filing paper copies if they file electronically is unnecessary. Commission Rule R1-28(b) provides that, with limited exceptions, those making electronic filings do not need to also file paper copies. Finally, NCSEA recommends that Rule R8-64 be amended so that applicants include the specific hours that they consider to be on-peak and off-peak. The Commission finds that this recommendation has merit and will adopt it.
The Commission has reviewed the comments as well as the proposed rule changes submitted by the Public Staff. The Public Staff provides many minor but useful edits that the Commission will adopt. In addition, the Public Staff proposed several substantive changes. In terms of the Public Staff’s proposal to raise the threshold in Rule R8-64(b)(2) that triggers the need for solar photovoltaic developers to file additional information, the Commission supports this change and agrees with NCSEA that such a change would streamline the process. However, the Commission will re-word the change somewhat to be more clear, as shown below:
In addition to the information required above, Aan applicant who desires to enter into a contract for a term of 5 years or more for the sale of electricity, and whose facility will have a projected dependable nameplate capacity of 5 megawatts alternating current or more, and whose facility is not a solar photovoltaic facility, available for such saleshall include in the application the following information and three additional exhibits: as described in R8-64(b)(6)(i), (ii), and (iii) below, except that an applicant who desires to enter into a contract of 5 years or more for the sale of electricity from a solar photovoltaic facility of 25 megawatts alternating current or more shall also include the three additional exhibits referenced herein.
The Public Staff recommended amending Rules R8-63 and 64 to clarify that applicants should provide the size of their proposed facilities in terms of megawatts of “alternating current.” The Commission will adopt those changes but also seeks comments as to whether it would be preferable to instead amend Commission Rule R8-2, so that all capacity reporting under Rule R8 (Electric Light & Power) would be in terms of alternating current, as shown below:
Rule R8-2. DEFINITIONS.
In the interpretation of these rules the word "utility" shall be taken to mean any person, firm or corporation engaged in the business of supplying electric current to domestic, commercial, or industrial users within this State except a municipality or electric membership corporation organized under G.S. 117-6 et seq. and the word "consumer" shall be taken to mean any person, firm, corporation, municipality, or other political subdivision of the State supplied by any such utility. Unless specifically stated otherwise, capacity of generation facilities is provided in alternating current (AC) delivered at the point of interconnection to the distribution or transmission facilities.
The Public Staff submits substantial changes to Rules R8-65 and R8-66, which are beyond the scope of the Commission’s September 8, 2014 Order. Therefore, the Commission will ask the Public Staff to file additional information explaining the need for these changes. The Commission specifically welcomes the Public Staff providing more information on how the requirements of GENERAL ORDERS – ELECTRIC
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Rules R8-64 and 65 could be “merged.” The Public Staff is also invited to file additional information as to the need to dismiss applications under Rule R8-64 after six months if an applicant has not yet filed its affidavit showing publication of notice.
Finally, the Public Staff proposes to delete the annual progress reports required in Rule R8-64(e). The Commission will decline to address that issue in this proceeding, as it is pending in Docket No. E-100, Sub 113.
IT IS, THEREFORE, ORDERED as follows:
1. That, consistent with the findings in this Order and as provided in Appendix A (black-lined) and Appendix B (changes incorporated), the Commission hereby amends Rules R8-61, 63 and 64, effective January 1, 2015;
2. That the Public Staff is requested to file an explanation of its proposed changes to Rules R8-65 and 66, on or before December 15, 2014;
3. That other parties may also propose changes to Rules R8-65 and 66 on or before December 15, 2014;
4. That all parties are invited to comment on the Commission’s proposal to amend Rule R8-2 on or before December 15, 2014; and
5. That Parties may file reply comments on or before January 16, 2015.
ISSUED BY ORDER OF THE COMMISSION
This the _4th day of November, 2014.
NORTH CAROLINA UTILITIES COMMISSION
Gail L. Mount, Chief Clerk
APPENDIX A
PAGE 1 of 13
Rule R8-61. PRELIMINARY PLANS AND CERTIFICATES OF PUBLIC CONVENIENCE AND NECESSITY FOR CONSTRUCTION OF ELECTRIC GENERATION AND RELATED TRANSMISSION FACILITIES IN NORTH CAROLINA; CONSTRUCTION OF OUT-OF-STATE ELECTRIC GENERATING FACILITIES; PROGRESS REPORTS AND ONGOING REVIEWS OF CONSTRUCTION; PROJECT DEVELOPMENT COST REVIEWS FOR NUCLEAR GENERATING FACILITIES.
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(a) A public utility or other person that plans to build an electricity generating facility with a nameplate capacity of 300 megawatts (alternating current) or more shall file with the Commission and the Department of the Environment and Natural Resources its preliminary plans Information to be filed at least 120 or more days before the filing of an application, by a public utility or other person, for a certificate of public convenience and necessity. The preliminary plans for generating facilities with capacity of 300 MW or more shall include the following exhibits:
(1) Exhibit 1 shall contain the following site information:
(i) Available site information (including A color maps or aerial photo (a U.S. Geological Survey map or an aerial photo map prepared via the State’s geographic information system is preferred) and description), preliminary estimates of initial and ultimate development, a drawing showing the proposed site boundary and layout relative to the map, with all major equipment, including the generator, fuel handling equipment, plant distribution system, startup equipment, site boundary, planned and existing pipelines, planned and existing roads, planned and existing water supplies, and planned and existing electric facilities;
(2) (ii) The E911 street address, county in which the proposed facility would be located, and GPS coordinates of the approximate center of the proposed facility site to the nearest second or one thousandth of a degree;
(iii) The full and correct name of the site owner and, if the owner is other than the applicant, the applicant’s interest in the site;
(iv) Justification for the adoption of the site selected, and general information describing the other locations considered;
(3) (v) As appropriate, preliminary iInformation concerning geological, aesthetic, ecological, meteorological, seismic, water supply, and local population and general load center data to the extent known;
(4) A statement of the need for the facility, including information on loads and generating capability;
(5) (vi) A description of investigations completed, in progress, or proposed involving the subject site;
(6) (vii) A statement of existing or proposed plans known to the applicant of federal, state, local governmental and private entities for other developments at or adjacent to the proposed site;
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(7) A statement of existing or proposed environmental evaluation programs to meet the applicable air and water quality standards;
(viii) In the case of natural gas-fired facilities, a map showing the proximity of the facility to existing natural gas facilities; a description of dedicated gas facilities to be constructed to serve the facility; and any filed agreements, service contracts, or tariffs for interstate pipeline capacity;
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(ix) A brief general description of practicable transmission line routes emanating from the site, including a color map showing their general location; and
(x) The gross, net, and nameplate generating capacity of each unit and the entire facility’s total projected dependable capacity in alternating current (AC).
(2) Exhibit 2 shall contain the following permitting information:
(i9) A list of all agencies from which approvals will be sought covering various aspects of any generation facility constructed on the site and the title and nature of such approvals; and
(10) A statement of estimated cost information, including plans and related transmission capital cost (initial core costs for nuclear units); all operating expenses by categories, including fuel costs and total generating cost per net kWh at plant; and information concerning capacity factor, heat rate, and plant service life. Furnish comparative cost including related transmission cost of other final alternatives considered; and
(ii) A statement of existing or proposed environmental evaluation programs to meet the applicable air and water quality standards.
(3) Exhibit 3 shall include a:
(11) A schedule showing the anticipated beginning dates for construction, testing, and commercial operation of the generating facility.
(b) In filing an application for a certificate of public convenience and necessity pursuant to G.S. 62-110.1(a) in order to construct a generating facility in North Carolina, a public utility shall include the following information exhibits supported by relevant testimony:
(1) Exhibit 1 shall contain the following resource planning information:
(i1) The utility’s most recent biennial report and the most recent annual report (as defined in filed pursuant to Rule R8-60), of the utility plus any proposals by the utility to update said reports;
(ii2) The extent to which the proposed construction facility would conforms to the utility’s most recent biennial report and the most recent annual report (as defined in that was filed pursuant to Rule R8-60);
(iii3) A statement of how the facility would contribute to resource and fuel diversity, whether the facility would have dual-fuel capability, and how much fuel would be stored at the site. Support for any utility proposals to
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update its most recent biennial report and its most recent annual report (as defined in Rule R8-60);
(iv) An explanation of the need for the facility, including information on energy and capacity forecasts; and GENERAL ORDERS – ELECTRIC
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(v) An explanation of how the proposed facility meets the identified energy and capacity needs, including the anticipated facility capacity factor, heat rate, and service life.
(2) Exhibit 2 shall contain
(4) Updates, if any, to the siting and permitting information as listed in Rule R8-61(a) information;, with updates as necessary for facilities that are 300 megawatts (alternating current) nameplate capacity or more, and for which this information had already been filed.
(3) Exhibit 3 shall contain the following cost information for the proposed facility, and for the final alternatives that the applicant considered:
(i5) An estimate of the construction costs for the generating facility, including the costs for new substation(s) and transmission line(s), and upgrades to existing substations(s) and transmission lines(s). For nuclear plants, construction costs shall include the plant’s first core fuel load;
(ii) Estimated construction costs expressed as dollars per megawatt of capacity;
(iii) Estimated annual operating expenses by category, including fuel costs;
(iv) Estimated annual operating expenses expressed as dollars per net megawatt-hour.
(v6) The projected cost of each major component of the generating facility and the projected schedule for incurring those costs;
(vi7) The projected effect of investment in the generating facility on the utility’s overall revenue requirement for each year during the construction period;
(vii) The anticipated in-service expenses associated with the generating facility for the 12-month period of time following commencement of commercial operation of the facility; and
(viii) The anticipated impact the facility will have on customer rates.
(4) Exhibit 4 shall contain the following construction information:
i. (8) The anticipated construction schedule for the generating facility;
ii. (9) The specific type of units selected for the generating facility; the suppliers of the major components of the facility; the basis for selecting the type of units, major components, and suppliers; and arrangements made or planned to assure a dependable the adequacy of fuel supply;
iii.(10)The qualifications and selection process of principal contractors and suppliers for construction of the generating facility, other than those listed in Item (9ii) above; and
APPENDIX A
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(11) Resource and fuel diversity and reasonably anticipated future operating costs, including the anticipated in-service expenses associated with the generating facility for the 12-month period of time following commencement of commercial operation of the facility; GENERAL ORDERS – ELECTRIC
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iv.(12) Risk factors related to the construction and operation of the generating facility, including a verified statement as to whether the facility will be capable of operating during the lowest temperature that has been recorded in the area using information from the National Weather Service Automated Surface Observing System (ASOS) First Order Station in Asheville, Charlotte, Greensboro, Hatteras, Raleigh or Wilmington, depending upon the station that is located closest to where the plant will be located; and.
(5) If the facility is a coal or nuclear-fueled facility, the application shall include Exhibit 5, which shall contain
(13) If the application is for a coal or nuclear generating facility, information demonstrating that energy efficiency measures; demand-side management; renewable energy resource generation; combined heat and power generation; or any combination thereof, would not establish or maintain a more cost-effective and reliable generation system and that the construction and operation of the facility is in the public interest.
(c) The public utility shall submit a progress report and any revision in the construction cost estimate during each year of construction according to a schedule established by the Commission.
(d) Upon the request of the public utility or upon the Commission’s own motion, the Commission may conduct an ongoing review of construction of the generating facility as the construction proceeds.
(e) A public utility requesting an ongoing review of construction of the generating facility pursuant to G.S. 62-110.1(f) shall file an application, supported by relevant testimony, for an ongoing review no later than 12 months after the date of issuance of a certificate of public convenience and necessity by the Commission; provided, however, that the public utility may, prior to the conclusion of such 12-month period, petition the Commission for a reasonable extension of time to file an application based on a showing of good cause. Upon the filing of a request for an ongoing review, the Commission shall establish a schedule of hearings. The hearings shall be held no more often than every 12 months. The Commission shall also establish the time period to be reviewed during each hearing. The purpose of each ongoing review hearing is to determine the reasonableness and prudence of the costs incurred by the public utility during the period under review and to determine whether the certificate should remain in effect or be modified or revoked. The public utility shall have the burden of proof to demonstrate that all costs incurred are reasonable and prudent.
(f) A public utility may file an application pursuant to G.S. 62-110.6 requesting the Commission to determine the need for an out-of-state electric generating facility that is intended to serve retail customers in North Carolina. If need for the generating facility is
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established, the Commission shall also approve an estimate of the construction costs and construction schedule for such facility. The application may be filed at any time after an application for a certificate of public convenience and necessity or license for construction of the generating GENERAL ORDERS – ELECTRIC
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facility has been filed in the state in which the facility will be sited. The application shall be supported by relevant testimony and shall include the information required by subsection (b) of this Rule to the extent such information is relevant to the showing of need for the generating facility and the estimated construction costs and proposed construction schedule for the generating facility. The public utility shall submit a progress report and any revision in the construction cost estimate for the out-of-state electric generating facility during each year of construction according to a schedule established by the Commission.
(g) If the Commission makes a determination of need pursuant to G.S. 62-110.6 and subsection (f) of this Rule, the provisions of subsections (d) and (e) of this Rule shall apply to a request by a public utility for an ongoing review of construction of a generating facility to be constructed in another state that is intended to serve retail customers in North Carolina. An electric public utility shall file an application, supported by relevant testimony, for an ongoing review no later than 12 months after the date of issuance of a certificate of public convenience and necessity or license by the state commission in which the out-of-state generating facility is to be constructed; provided, however, that the public utility may, prior to the conclusion of such 12-month period, petition the Commission for a reasonable extension of time to file an application based on a showing of good cause.
(h) A public utility may file an application pursuant to G.S. 62-110.7 requesting the Commission to review the public utility’s decision to incur project development costs for a potential in-state or out-of-state nuclear generating facility that is intended to serve retail electric customers in North Carolina. The application, supported by relevant testimony, shall be filed prior to the filing of an application for a certificate to construct the facility.
Rule R8-63. APPLICATION FOR CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY FOR MERCHANT PLANT; PROGRESS REPORTS.
(a) Scope of Rule.
(1) This rule applies to an application for a certificate of public convenience and necessity pursuant to G.S. 62-110.1(a) by any person seeking to construct a merchant plant in North Carolina.
(2) For purposes of this rule, the term "merchant plant" means an electric generating facility, other than one that qualifies for and seeks the benefits of 16 U.S.C.A. 824a-3 or G.S. 62-156, the output of which will be sold exclusively at wholesale and the construction cost of which does not qualify for inclusion in, and would not be considered in a future determination of, the rate base of a public utility pursuant to G.S. 62-133.
(3) Persons filing under this rule are not subject to the requirements of Rule R1-37 or Rule R8-61 or R8-64.
(b) Application.
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APPENDIX A
PAGE 6 of 13
(1) The application shall contain all of the exhibits listed below, which shall contain the information hereinafter required, with each exhibit and item labeled as set out below. Any additional information may be included at the end of the application.
(1) Exhibit 1 shall contain the following information about tThe aApplicant:
(i) The full and correct name, business address, and business telephone number and electronic mailing address of the applicant;
(ii) A description of the applicant, including the identities of its principal participant(s) and officers, and the name and business address of a person authorized to act as corporate agent or to whom correspondence should be directed; and
(iii) A copy of the applicant’s most recent annual report to stockholders, which may be attached as an exhibit, or, if the applicant is not publicly traded, its most recent balance sheet and income statement. If the applicant is a newly formed entity with little history, this information should be provided for its parent company, equity partner, and/or the other participant(s) in the project.; and
(iv) Information about generating facilities in the Southeastern Electric Reliability Council region which the applicant or an affiliate has any ownership interest in and/or the ability to control through leases, contracts, options, and/or other arrangements and information about certificates that have been granted for any such facilities not yet constructed.
(2) Exhibit 2 shall contain the following information about tThe proposed fFacility:
(i) The nature of the proposed generating facility, including its type, fuel, size, and expected service life, and the gross, net, and nameplate generating capacity of each generating unit and the entire facility, as well as the facility’s total projected dependable capacity, in megawatts (alternating current); the anticipated beginning date for construction; the expected commercial operation date; and estimated construction costs;
(ii) A detailed description of the location of the generating facility, including a color map or aerial photo (a U.S. Geological Survey map or aerial photo map prepared via the State’s geographic information system is preferred) showing the with the location marked;
(iii) A drawing showing the proposed site boundary and layout relative to the map provided pursuant to (B)(ii), with all major equipment, including the generator, fuel handling equipment, plant distribution system, startup equipment, site boundary,
GENERAL ORDERS